A few days after the referendum in June I wrote a piece in which I advocated that there were reasons to be concerned, but there was no need to panic.
Just over three months have elapsed since then so what, if anything, has changed? Inevitably there was plenty of hot air, doom and gloom to begin with and some short term volatility. The doom-mongers predicted the end of the commercial property market as we know it, but in reality that was a natural consequence of the immediate uncertainty of what was going to happen, that excitement has now passed and it’s business as usual.
Or is it? Well not quite, of course, because Brexit still looms large and no-one really knows what that might look like. The FTSE (100 and 250) are flying high again, but the pound continues to struggle, particularly against the dollar. Theresa May has just announced that the process by which we will leave the EU will be triggered by next March and that could then take years to negotiate.
Uncertainty will therefore continue but, unlike the immediate aftermath of the vote on 23rd June, when near hysteria prevailed, this is going to be a long drawn out process when, frankly, we just have to get on with our lives. Property deals are not going to grind to a halt. Occupiers will always need space to occupy and investors will always want property stock to invest in. The former will be encouraged by the long-awaited rates revaluation announced on 30th September which will result in rate reductions across the country (but not London), albeit that the transitional arrangements will take some years in order for occupiers to feel the full benefit. The latter will continue to benefit from low borrowing costs, courtesy of historically low interest rates, and continued good returns from property.
Yes there will be ups and downs, but when has that not been the case in any property cycle? As I said in the first article, property will always be a safe investment when viewed over a long enough period. I’m not too concerned at this point about Brexit’s effect on the commercial property market. Frankly, I’m rather more concerned about the prospect of Donald Trump winning the presidential race, but that’s a whole new topic which the world as a whole, rather than UK commercial property, should be worried about.
Written by Richard Wheeldon, Consultant at Berwins Solicitors