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A quarter of the value of commercial property transactions on the market during the EU referendum, or about £3.5 billion, has since fallen through, although values managed to hold up well, reported The Telegraph.
Cushman & Wakefield revealed that around 50 percent of the deals that were being worked on have already been completed, while another 15 percent are now under offer, while six percent are still on the market.
More than 200 retail, industrial and office assets worth around £8 billion (S$14 billion) have been sealed since the Brexit vote, accounting for 45 percent of total investment activity in H2 2016.
“Deals have taken longer to complete and a greater proportion have been withdrawn but, on the flip side, values have held up remarkably well, reflecting the UK’s strong fundamentals,” noted Jason Winfield, Cushman & Wakefield’s Head of UK investment.
“That said, we do not yet know the full implications of the UK’s decision to leave, and how that will manifest itself in occupational markets.”
After the referendum, some commercial property funds suspended trading, taking £792 million out of the sector, revealed figures from the Investment Association.
In fact, Aviva Investors only re-opened its doors on 15 December.
Cushman & Wakefield’s research showed that transactions worth £100 million or more suffered three months’ delay, compared to sub-£20 million transactions after the Brexit vote, but managed to catch up in November.
Transactions within the £20 million (S$35 million) to £99 million (S$174 million) range, however, continued to lag.
“Typically you might expect transactions to take three months to go under offer – since the Brexit vote it has been taking up to five or even six months for deals to progress this far,” noted Nigel Almond, Cushman & Wakefield’s Head of EMEA Capital Markets Research.
“The lower proportion of completed deals in the mid-range can be partly explained by a number of shopping centres which are currently under offer, and we expect those to be sold in the near future.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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