BREXIT INSIGHT: PROPERTY Dr Neil Blake, Head of Global Forecast and Analytics and EMEA Chief Economist at CBRE, tells INFO how London and the UK property market has reacted since the EU Referendum six months ago
espite negativity in the markets further to the outcome of the EU Referendum, London’s property market remains
attractive. London is the world’s number one destination for cross-border investment, and property giant CBRE does not expect this to change anytime soon. ‘Surprisingly little has happened so far in the commercial property markets,’ Dr Neil Blake, Head of Global Forecast and Analytics and EMEA Chief Economist at CBRE told INFO. ‘There
was some marking down, particularly in prime offices, but it stopped there. There hasn’t been much of a shift since then. If anything, our valuers and agents have seen a strengthening or stabilisation of the markets. Things aren’t quite what they were before the referendum, but there certainly has been no collapse.’
‘It’s expensive to do – you don’t just move easily, on a whim.’
In particular, Blake highlighted that prime retail was doing
As for technology companies, London has attracted a
well, thanks in part to having benefitted from the fall in sterling.
number of high-profile investments in the last quarter of 2016:
He also noted that industrial property has been getting stronger,
including Google, which confirmed last November its plans
rather than weaker.
to build a new headquarters near King’s Cross and create a
Quantitative data on UK commercial property backs this up.
further 3,000 jobs. Apple also confirmed it would move its UK
CBRE’s research, published in its Marketview UK Monthly Index,
headquarters to the decommissioned Battersea Power Station,
shows that rental value growth remained stable, but capital
with space for 3,000 employees.
values increased in October 2016, for the first time since the
‘These big announcements have boosted confidence,’ said
referendum (see chart). Many sectors remain resilient to Brexit-
Blake. ‘So while tech companies are worried about restrictions
related uncertainty for now.
on migration following Brexit, there is some optimism that the Government will come up with a system that does not block
access to foreign talent.’
With regard to occupier trends, the Central London market
The future remains uncertain, however. ‘We do not know
remains buoyant. CBRE’s research shows that demand in the
whether this is the calm before the storm. We can expect
traditional office markets of the West End, City and Docklands
some weakness in the market by 2018, but currently we’re in
remains strong; but the research also shows an eastward
a situation where there is no shortage of investors that are
migration from the West End, particularly into Midtown.
interested in UK property.’ I JH
London’s economy makes the city attractive. While the UK economy is expected to have grown by 1.8 per cent in 2016 and by 1.1 per cent in 2017, London is forecast to outpace this,
UK RENTAL AND CAPITAL VALUE GROWTH
with local GDP growing at 2.3 per cent in 2016 and 1.7 per cent in 2017. ‘There is a lot of capital – internationally – that is looking for somewhere to go, and London is a big market,’ said Blake. ‘Since London values weakened over the summer, the city looks relatively cheap compared to the rest of Europe.’ Growth in demand is expected to be driven by those sectors that are the strongest in London: financial services, creative industries (which include tech, media and telecom) and business services. Blake warned that this could change in the longer term, however. ‘There is a lot of concern around financial passporting, and various other European cities are already courting UK and foreign banks that are based in the UK,’ he said, but added that there was no obvious evidence of any forthcoming moves yet.
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