Commercial Property Market Hit by Brexit Vote
The UK’s once booming commercial property market has been negatively affected by Britain’s vote to leave the EU. Research reveals that purchases have fallen significantly for the first time in three years.
The research, conducted by HM Revenue & Customs has revealed that numerous high profile commercial deals have been cancelled in London following the vote, one of the most significant being the purchase of a landmark office block by Germany’s Union Investment. Another deal to fall through was with law firm Evershed that backed out of plans to buy 1 Wood Street in the capital.
Nobel Francis, economic director of the Construction Products Association said that it is no surprise that commercial property investments are the first to be hit by the result, as they are long-term contracts and require complete confidence in the state economy.
Director of corporate real estate at BNP Paribas, Johnny Dunford said: “Some investors and occupiers have taken an unsurprising pause for breath as the new business landscape emerges.”
Yesterday, HMRC published figures that revealed that 1.7% fewer commercial properties were sold last month than in the same time period last year. This is the first year-on-year decrease since April 2013.
Despite the significant blow to the commercial property market, the housing market has remained steady following Brexit. The statistics provided by HMRC revealed that 94,550 homes were bought last month, which is only 1,000 less than in June this year. This is unsurprising, as there is often a small decrease in house purchases during the summer months.
It is clear that mixed feeling still surround the industry in this time of uncertainty. The true effects of Brexit will be experienced when Prime Minister Theresa May triggers Article 50 in the coming months, which will begin the process of officially leaving the European Union.