The most momentous decision ever made by the British electorate has been made and we now have to live with the consequences. The early indications are not good, but there is no surprise about that. Uncertainty always leads to turmoil and questions such as who will lead the country going forward, who will lead the opposition, whether there will be an early General Election, what the terms of our exit will be, whether a Brexit will lead to a wider break-up of the European Union and whether Scotland will seek to take advantage of the situation by forcing another independence referendum are just some which will be debated ad nauseam. Of one thing we can be certain - there will be months, if not years, of uncertainty.
So what is the future for the property market in this country? The financial markets are already in turmoil and that will continue. The commercial and residential property markets will not be able to avoid this - indeed some of the biggest fallers in terms of share price since Thursday have been the house builders - but, looking longer term, is there any need to be concerned about the future of the commercial property market?
Well, yes, there are reasons to be concerned, but no reasons to panic. The UK property investment market is strong. It has long been a go to market for investors, it is large, it is sophisticated, it is underpinned by a stable democracy and, as such, it is unlikely that in the long term it will suffer unduly as it will continue to be attractive to investors. Of more concern is the short to medium term development market. There has been plenty of evidence in recent months that businesses thinking about expanding and/or relocating to new and larger manufacturing and distribution facilities or larger new offices have been postponing their decisions pending the EU referendum. That is inevitably going to continue until the major issues have either been resolved or at least a clearer picture emerges. A reduction in the number of occupiers (purchasers and tenants) wanting new space will therefore lead to a slowdown in the development market and we can expect, therefore, a much quieter few months (or longer) as the market takes time to reach its own conclusions.
Long term, we should not be unduly concerned. There will always be good value in land, bricks and mortar. Property historically has been, and will continue to be, a safe bet when viewed over the longer term and that is unlikely to change. In the meantime, sit tight…
27th June 2016