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Market experts expect international property investors to “pile into” the UK should Britain opt to exit the European Union, reported The Telegraph.
In the event of a Brexit, market experts say the sterling is expected to fall drastically, making assets cheaper for private buyers and overseas funds. This could also trigger a bounce in the commercial and residential property sector, said international real estate group JLL.
“This is the big irony of the leave campaign – which is anti any foreign influence. In the event of a Brexit we may see a price correction in property and a fall in sterling which opportunistic international investors will view as a chance to pile in,” said Guy Grainger, head of Europe, the Middle East and Asia for JLL.
Notably, the UK commercial property market saw investment volumes slow in the build up to the referendum, with transactions falling 31 percent in Q1 2016 from Q1 2015, and 11 percent in London as activity eased amidst uncertainty.
Moreover, a report from the Royal Institute of Chartered Surveyors showed that 80 percent of its members believe that investment flows have been held back by the fear of an unknown future. This, along with high UK property values, has created pent-up demand that is ready to react to a price correction, the report said.
“Uncertainty leads to volatility which equals opportunity. There is a huge amount of capital waiting,” said PwC head of real estate Craig Hughes.
A Brexit bounce, however, would be followed by two years of deep uncertainty as the corporate Britain and the government renegotiate trade agreements, warned JLL’s Grainger.
“As a nation we attract investment and trade because of our culture of openness and transparency. This fundamentally changes if we choose not to be a part of the European Union,” he said.
A new JLL research also found that both domestic and international property companies based in the UK believe that Brexit may result in office closures and job losses, particularly within London.
Fearing a drop in headcount, a third of the 84 corporate occupiers and property investors believe companies will have to slash their office space.
The survey further showed that the office market in London will likely be more affected than any other property sector as international and domestic companies reconsider the cost and size of their London headquarters.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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