As the Brexit steamroller continues unabated in Parliament, we stop to consider whether Brexit is a threat to the commercial property market in the UK.
First things first, this is of course, an opinion piece rather than a journalistic study into the market. However, as a firm we are pretty united in our views that Brexit, as a whole, is incredibly damaging to the country. Not only in terms of the economy, but also our standing as an international leader, our ability to access and wield ‘soft power’ and our influence across the world. The entire Brexit process has weakened the UK, splitting the population down the middle into crude caricatures of ‘Remainer’ or ‘Brexiteer’.
The Brexit campaign
The Brexit campaign was designed to appeal to the nation’s worst selves, revealing racism, nationalism, a distrust and deep dislike of ‘the other’; and was at its base level a shameful, embarrassing call to arms by a breed of pro-Empire, pro-England, anti-immigrant political train of thought that most of us hoped and believed had died with Enoch Powell.
The Remain campaign on the other hand simply failed to grab the mettle and sing the extensive virtues of EU membership loudly enough. Whether through arrogance or simple lack of leadership the Remain campaign was, at best, lukewarm in its delivery. Of course, the extent to which the Brexit campaign was lawfully delivered is questionable but nonetheless, the Brexiteers won on the day, kickstarting a juggernaut that continues to run.
But back to the commercial property market in the UK. Markets are, of course, based upon confidence by and large, and the property market can be vulnerable to both excessive confidence (hello property bubbles) and dramatic loss of confidence (hello financial crash of 2008). A simplistic view perhaps, with other factors of course having their own effect, it is nonetheless probably safe to say that investors in property across the UK are watching the Brexit process closely.
So what will Brexit mean for the market?
To a large extent, it will depend upon the type of exit from the EU delivered. A no-deal Brexit would be likely to create a real shock to the market and the economy as a whole, on both the announcement of no-deal and then probably again on the exit date.
A Brexit deal delivering increased certainty would be preferential of course, but in the current climate, looks less likely than either a no-deal or Remain scenario. There is currently little common ground amongst both Remainers and Brexiteers for any deal agreed between the Prime Minister and EU.
If a general election and / or referendum is triggered, it seems likely that the options will boil down to no-deal or remain. Whilst of course our preference would be to remain, the no-deal option becomes considerably more likely.
For investors, confidence is inherently linked to certainty, and investors certainly dislike uncertainty. Although commercial property is often seen as a ‘safe’ investment, it is still at the mercy of the market. In the worst case of a no-deal Brexit, we could see a sharp drop in investment into the market, a reduction in moves and investments and falling rents. At best, we may see a pause in activity.
Whilst we do not offer investment advice, we foresee a potentially difficult road for the commercial property market across the UK. Businesses reviewing their office space, and investors their portfolios will need to keep a close eye on the Brexit process, and ensure they have access to strategic advice. Interesting times follow and we will be following developments in Whitehall closely.