Recent research has shown that the UK’s upcoming exit from the European Union is causing no small amount of concern in the European property sector. The Emerging Trends Europe report shows an overall downbeat sentiment towards Brexit and its impact on property, although it also shows that some within the sector see the potential for opportunity.
The effect of Brexit on the UK’s own property market has already been evident. There has been a definite slump since the somewhat surprising vote in favour of leaving the EU. While the considerable drop in the value of the pound has softened this effect by stimulating some sources of international investment with the temptation of better prices, this has not been enough to counteract the overall drop in activity.
Now it seems that fears over the effect of Brexit are not confined to the UK. The recent research was conducted by the Urban Land Institute and PwC, surveying 800 leading figures in the real estate industry from across Europe. 89% of the survey’s respondents said that their single biggest source of concern right now was political instability. An even larger portion, 92%, predicted that 2017 will see both property values and investment volumes in the UK drop.
The general fears surrounding Brexit could perhaps more accurately be viewed as a collection of different concerns, all stemming from the same root cause. There are concerns that, by extracting itself from the Union and the single market, the UK will make it rapidly harder for its businesses to import, export, or operate overseas with a profound shock effect on economic growth and natural consequences for the property sector. There are also concerns that severing the country’s connections to the EU will lead to both international businesses and skilled workers moving to rival cities that are still within the EU market.
However, on the whole it seems that those operating in the property markets of Europe do not expect the impact of Brexit to be as bad as might have been feared. Certainly, the prevailing sentiment among the respondents to the recent survey is that this will not result in such a profound drop as the one seen in 2009. Whether this is such good news for those with properties in London is debatable, however, as for obvious reasons this is the city expected to bear the brunt of Brexit.
Already, London has fallen from number 11 in the rankings of European property investment locations to number 27. This is a drastic slip, but even so the city is still considered a reasonably attractive place to invest by many investors in Europe and around the world. Indeed, for some investors Brexit seems to have made London a city to be watched. It is believed that if negotiations on the terms of the UK’s withdrawal from the Union prove positive, then London’s property market may rebound noticeably from its initial slump, and a fair number of eyes are currently trained on the city in a bid to spot opportunities should things start heading that way.
Author Bio
Hopwood House are specialists in property investment, with a large portfolio of UK property investments in the student, care home and buy to let markets.
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Daniel Peacock