Uncertainty regarding the EU referendum is putting off international firms from investing in UK offices and shops, according to a new report.
The Royal Institution of Chartered Surveyors (RICS) report suggests that there has been a steady easing in international demand for UK office, industrial and retail property since the referendum was confirmed last spring.
Nearly 40 per cent of RICS members across the UK said that in the first quarter of 2016, international retailers and others were reducing investment in the UK ahead of the June referendum. In London, 80 per cent said that uncertainty around the outcome was holding back investment.
Demand from international investors for UK offices and shops has fallen sharply, with just 5 per cent of RICS firms reporting increased interest from overseas companies over the last three months, compared with 36 per cent a year ago.
RICS chief economist Simon Rubinsohn said: “There is no doubt that since the EU referendum became a certainty following the general election last May we have seen a decline in interest from overseas investors in UK commercial property. At least in the short term, we know that international retailer and service providers are finding the UK market less attractive.”
Separately, analysts at the Standard & Poor’s credit rating agency said a leave vote could lead to a price crash, reversing the gains in property values seen in recent years, with London most affected and the commercial market more heavily impacted than the housing market, in particular from financial firms scaling back office investments.
Carey Jacobs, a partner and Palmers Head of Property, commented: “The RICS report is not particularly surprising, given that any market uncertainty will tend to give rise to a natural reticence to invest.
“Whether international companies are adopting a temporary ‘wait and see’ approach, or whether commercial property will in fact suffer from a decline in international investment in the longer term, depending which way the referendum vote goes, is largely supposition at this stage.”
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