In the early hours of Friday 24th June 2016, the shock news trickled through that the UK public had voted 51.9% in favour of leaving the European Union. The immediate aftermath of the EU Referendum was cast in to the spotlight, with the pound dropping to a 31-year low, and billions of pounds were wiped off the markets. Rumours of Blue Chip organisations already beginning to relocate their 2,000 strong work-force from London were circulating the news channels.
But now that the dust has settled from the immediate panic and uncertainty, and markets have recovered, and the pound has stabilised, what does Brexit hold for the future of the UK Property Market? With no deadline to trigger Article 50 and begin the 2 year process of Britain leaving the EU, there is speculation of both good and bad news.
Leading experts believe that London office building values could drop as much as 20% within 3 years of Britain leaving the EU, directly affecting rents in the capital. Early figures show that take-up had dropped below 1 million square feet for the first time since 2012. On the reverse of this however, regional markets are expected to escape relatively unscathed, with Cardiff, Bristol and Birmingham already recording a well above average take-up. SMEs are expected to find more affordable office space as a result of Brexit, a move that will help to prop up local economies. One of the few upsides of the cheap pound, is that there is expected to be an increase in foreign investment in property during the months following the Referendum result. This could help bolster the knock that larger cities and local economies are expected to take.
Whilst London is evidently likely to bear the brunt of the Brexit impact, the weeks following the Referendum have shown that companies and markets are already beginning to put contingencies in place, so that they will be best placed for when the UK finally does leave Europe. With any major changes likely to be many years off still, Britain appears set to still retain its seat as a major force in the world property markets.