UK ‘Brexit’ from the EU
With the EU referendum on the UK's membership of the EU a hot topic, what effect do the public and business believe it will have on the UK property market?
A survey carried out by CBRE showed that over 60% of investors thought leaving the EU would have a negative effect on the UK’s attractiveness as an investment location, with fewer than one in 20 thinking a ‘Brexit’ would be positive from a property perspective. The CBRE report on the effect of a Brexit states that with London and the South East currently home to headquarters of 60% of the top 250 global companies, an exit from the EU would have implications for the demand on office space from these and other occupiers.
More than 54% of the respondents to another recent UK survey of businesses, carried out by Maples Teesdale, thought a UK exit would make the UK a less attractive marketplace; while some 50% of investors said it would lead directly to a fall in property values. Support for the move stood at just 23.5%, and only 12.9% believed their business would stand to benefit from a potential exit.
The survey’s conclusions were drawn from the opinions of 117 targeted individuals at major organisations including Aberdeen Asset Management, CBRE, F&C REIT, JLL, Knight Frank, Lloyds Banking Group, M&G Real Estate, Moorfield and Standard Life and Valad.
It is understood that the majority of businesses and investors believe that it would be better to reform the relationship with the EU than to leave altogether. However, many businesses are already allowing their investment decisions to be influenced by a possible exit.
It has been widely reported that Deutsche Bank who employ 9,000 people in Britain is considering pulling out if voters decide to leave the European Union and in the light of HSBC's decision to relocate its HQ outside London, it seems unlikely that Deutsche Bank are the only organisation considering it's options ahead of the referendum.
London claims to be the financial capital of the World and the financial services industry is one of the sectors likely to be the hardest hit by a UK Brexit. With the UK property sector in London and the South East being so heavily reliant on the financial sector it would be naive to believe that property investment in the region wouldn't be seriously affected.
This is certainly a topical issue and one that may well cast a long shadow over investor confidence until as late as the end of 2017, when the result of the referendum will be finally decided.