A referendum is being held on Thursday, 23 June, to decide whether Britain should leave or remain in the European Union. We look at how the outcome will affect the property market.
The Royal Institute of Chartered Surveyors (RICS) released a report in April, looking at the impact of the EU referendum for land, property and construction. The report states:
- Office: Some international clients are preparing contingency plans to shift their headquarters in the event of Brexit – harming occupancy rates, particularly in London.
- Retail: Brexit will raise the question over whether existing or potential pan-European retailers would continue to view UK as a prime location for their headquarters.
- A significant number of high end properties, particularly those in London and the south east, are purchased by EU and non-EU individuals. Brexit could see less demand for high end properties from these individuals, thus relieving pressure in demand for high-end residential areas.
- House prices could decrease in the immediate to short term.
Helen Gough from JLL supports remaining in the EU, stating: “Remaining in the EU will boost confidence and therefore foreign investment into the UK in relation to commercial and residential development. Indeed EU money has funded a large proportion of infrastructure and regeneration projects throughout the UK which would otherwise have been incredibly difficult, almost impossible to do without external involvement. Given the construction industry is an important driver of economic prosperity; an ‘in’ vote surely makes sense.”
In April, CNN Money announced Brexit fears were hitting London’s real estate claiming, “Investment in central London offices hit the lowest level in five years in the first quarter of 2016, as the referendum on Britain’s future in the European Union looms.”
With the uncertainty over the outcome of this weeks E.U. referendum, it’s no surprise investment in the UK has slowed down.
A survey by KPMG showed that more than two-thirds of big global real estate investors believe leaving the EU would result in less investment into U.K. property. A third of the companies surveyed said they were planning to or have already reduced investment into U.K. property ahead of the June 23 referendum.
Impact for land, property and construction (RICS, April 2016)
Why JLL supports remaining in the EU (JLL, June 2016)
Brexit fears are hitting London’s real estate (CNN Money, April 2016)