Can Commercial Property stand tall post-referendum?
The initial shockwaves of the Brexit vote soon impacted on the commercial property market with reports of large deals being pulled, Brexit termination clauses being triggered, property funds being suspended and billions of investment being withdrawn.
Analysts are reporting that occupier demand in London is down leading to reduced rental predictions and that deal activity and values are also down. There are predictions of prices falling by up to 10% over the next two years. But many feel that the market had begun to slow before the referendum vote and that a downwards adjustment in prices was needed.
So do the effects of Brexit spell difficult times ahead or are there reasons for optimism? It is certainly true that we face an uncertain economic outlook but the UK property market is not founded solely on Central London prime office space – it encompasses retail warehouses, manufacturing and distribution centres, shops, shopping centres and offices across the whole of the UK. Commercial property still offers income and returns which outstrip other asset classes in the current climate and the fundamentals of the market should still prove attractive for overseas buyers, especially with the weaker pound increasing their buying power.
We have not yet seen a market exodus similar to that of the financial crisis and many commentators believe that we will not. So, although we are entering uncertain times and there may be challenges ahead, we may yet see that the commercial property market can continue to hold its own.
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Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.