The last few years have been unstable for the commercial property market, as investors, owners and agents cannot predict how Brexit will affect the real estate industry and the overall UK economy.
Indeed, since the referendum took place on June 23rd 2016, resulting in 51.9 per cent of the British public voting to leave the European Union (EU), while 48.1 per cent chose to remain, the government has been unable to negotiate a deal to facilitate an exit.
Britain was meant to have resolved the issue by the end of March this year, which was the deadline for leaving. However, failing to do so resulted in an extension of the deadline to October 31st and appointing a new Prime Minister to handle the exit strategy.
Now that Boris Johnson has control of the negotiations, it remains to be seen whether he can successfully take the UK out of the EU with a deal everyone can agree with and in a way that does not disrupt the country’s economy, including its commercial property market.
While it is uncertain what the outcome will be and if foreign investors will relocate their interest and money elsewhere, the Royal Institution of Chartered Surveyors (Rics) has revealed the market is still going strong despite the instability.
Its Q2 2019: UK Commercial Property Market Survey reported that 68 per cent of surveyors did not have evidence that firms are relocating away from the UK in response to the Brexit vote.
While this is an increase from six months ago, it is still far higher than the number of surveyors who said they had seen evidence of investors pulling out from British property as a result.
The report stated: “Going forward, a slim majority (52 per cent) of respondents nationally do expect relocations to occur although this will very much depend on how the Brexit process unfolds from this point.”
The next two years are pivotal for the industry, as it will reveal whether there is still international demand for commercial real estate in Britain, particularly in London and the south-east where many foreign investors typically choose to buy.
Ben Coleman, from Ben Coleman Associates, stated: “Whilst there are concerns over Brexit and the on-going uncertainty in the market, demand is holding up well – a shortage of quality stock is a major factor in the local/regional market.”
One way to make properties even more appealing to investors is to give them a new lease of life. Choosing new shop-front coatings or door-spray paintings will certainly make buildings less tired and aged, and therefore more appealing to buyers.
Investors can be deterred from spending their money if they think a prospective property will require lots of renovating. However, quick redecorating jobs such as spray painting will make them look updated without a lot of effort.
This will certainly help the retail property sector; however, Alan Matthews from Barker Storey Matthews is confident the industrial real estate industry is faring well regardless of Brexit.
“We are experiencing strong demand from investors for un-let small industrial units, which will yield six to seven per cent once let,” Mr Matthews stated. He noted that office-occupier demand is, however, quite weak, noting: “It’s hard to say with any degree of certainty how Brexit is affecting the market, but it certainly isn’t helping.”