In the wake of the referendum result the clamour for certainty is the aim of the game with our new Prime Minister asserting that ‘Brexit means Brexit’ but what does it mean for the commercial property market? What opportunity lies ahead? DTM explains how commercial property may be affected.
The short term effects are evident with several property funds having suspended trading. However, the long term effects remain unknown and could yet render the short term pain worthwhile.
Of course, many will feel the squeeze of uncertain markets but trade will not simply cease with our European neighbours and the changing relationships could well present profitable opportunities for those willing to invest in property.
It is accepted that there will be a fall in property price, with predictions ranging from 25% to 30%. Whichever view you sign up to lower property prices represent an opportunity for those with the cash resources to invest and buy while the market lulls.
While there will be some opportunities to pluck properties from highly geared property portfolios or pressurised developers, few expect the widespread stressed investment sales of 2009.
The cautious approach of lenders and investors alike following the 2008 crash has provided safeguards. Further comfort should be taken in Mark Carney’s pledge to preserve liquidity with a £250 billion contingency plan.
There are very few direct links between the UK Property market and EU Law however environmental law could well benefit from the cutting of the red tape so eagerly sought by the Brexiteers and therefore present a welcome break for investors and developers alike.
One of the less publicised and possible benefits could be the delays caused to the introduction of some UK based legislation, particularly planning, which will allow developers greater breathing space at a time when their resources could be taken up by higher import prices.
London, with its reputation as a safe haven for investors, unequivocally voted to stay in the EU. The capital’s appeal to investors remains but the damage created by the result has added to pre-referendum slowdown.
Liverpool and Manchester should take note of the opportunity this presents to redirect investment, especially when it comes to the fresh investment seeking to take advantage of the cheap pound.
One of the areas set to be at the centre of the UK’s negotiations with the EU is the free movement of people. It proved to be a divisive topic throughout the referendum campaign yet still an unknown quantity.
Should the Brexiteers get their wish and the borders close this would present threat to a construction industry underpinned by a foreign labour market, especially when considered with the uncertainty of access to materials and finance. However, these threats need only be short term with the advice remains to keep calm and invest in homegrown talent and materials.
The UK has yet to even enter the exit of EU and the change is reported in seismic proportions but the only actual change at this stage is political. Not to discount the reaction to the political change but only when the negotiations begin in earnest will we have a true idea of the changes to come.
One thing is for certain is that change brings opportunity. It is up to individuals and businesses alike to make and take those opportunities to ensure the referendum result proves to positively strengthen the UK economy.