London Real Estate Feeling Effects of 'Brexit'
For the first quarter of 2016, investments in the commercial district of London had hit rock bottom in the past five years. According to a report from Money.Cnn, this can be attributed to the pending referendum of Britain's membership in the European Union.
The volume of investments for the first three months of 2016 fell 31 percent below the ten year average. This is roughly worth £2.2 billion, less than half of the £4.6 billion earned in the last quarter of 2015, according to research conducted by real estate firm Lambert Smith Hampton.
According to Lambert Smith Hampton CEO Ezra Nahome, "It's no surprise that investors have taken a step back in the face of growing uncertainty over the outcome of June's EU referendum. We saw it in 2014 ahead of the vote on Scottish independence and we're experiencing it again now--- investors do not like uncertainty."
There has been a sit-and-wait attitude coming from investors from Asia and other countries. According to a report from Real Estate IPE, the impact has been felt not just in the UK but throughout continental Europe.
According to agent from IPE Real Estate, "We know of Chinese buyers being reluctant to commit to any deals until the outcome of the referendum is known."
Overall, the UK commercial real estate market is already feeling the weight of the uncertain times ahead. According to Cluttons Head of Research Faisal Durrani, "The uncertainty and nervousness being fuelled by the in-out EU referendum is impacting the volume of property transactions."
He added that the landscape is going to face 'challenging headwinds'.
This was echoed by Standard & Poor's Credit Analyst Marie-Aude Vialle, who said, "Should the country decide in favor of a Brexit, prolonged uncertainty during the exit negotiations may turn investor sentiment more negative." She added that the run up to the vote would have 'a somewhat paralyzing effect on investor decisions on UK real estate purchases.'