Initial reaction:
“The vote for Brexit brings an unprecedented new dawn for Britain, and for Europe. In the short term we are now in a period of pronounced uncertainty.”
On the risk of European contagion:
“Even if it is effectively ‘business as usual’ for the UK in terms of trade and legislation until 2018, such a major change will inevitably create uncertainty in the real estate markets. In the event of a well-managed exit these impacts will be largely confined to the next two years.”
Real estate dynamics:
“In the short term we may see a weakening in occupier demand as businesses take more time to consider investment decisions. The impact on rents may be limited by tight supply, but activity will be adversely hit while initial uncertainty about direction and timing continues. Investor sentiment may also remain subdued in the short to medium term, although a drop in Sterling may provide a moment in time for some opportunistic international investors. For property markets, the initial correction may be most severe but should be followed by an upturn as opportunities re-emerge in UK core markets and benefits of weak sterling are recognised. Sentiment and relative pricing will be key.”
Possible opportunities in context:
“This event is a trigger for many investors and occupiers to make adjustments to their real estate strategy. Some decisions may continue to be put on hold, or reassessed entirely. At the same time, we expect there may also be some positive implications for other mature markets in Europe and, potentially. In the light of currency movements, international investors may be attracted to certain parts of the UK market. This could be relatively short-lived at least until currency volatility subsides and notwithstanding the underlying uncertainty which will colour sentiment for at least a couple of years.”
How JLL is helping:
“We have been keeping close to our investor and occupier clients on the issue of the EU Referendum and their likely approach in the event of a Brexit vote. One thing is absolutely certain: clients across the board are going to need access to up-to-date, comprehensive data to inform their real estate strategies. JLL’s global research team taps thousands of data points every day. With hundreds of years of combined experience in the team, the real skill is in the ability to interpret how everything from global capital flows to REIT performance, interest rates to labour market data, and investor and occupier sentiment to demographics and migration will play out in real estate.”
