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Brexit - What Could Unfold for Real Estate Investment?

2 MIN READNovember 22, 2019
After a long 3+ years of Brexit looming over British trade, it’s pretty common knowledge now that political and economic uncertainty has provoked a ‘wait and see’ approach from global and domestic investors of real estate. A private, informal discussion including the key investors in the region was held by GRI Club UK & Ireland in partnership with Global Risk Insights, and they highlighted Brexit in relation to the pricing in the risk of politics and real estate. 

As participants debated Brexit, the popularised term for the UK’s exit from the European Union, they concluded it was never going to be a straightforward process. Yet with social media and click-based journalism further dividing public opinion, as well as three missed deal deadlines and a General Election, it’s left investors with must uncertainty on the economic future of the country.

It was said that house prices stagnated for a period following 2016’s initial referendum, however this is normal for that particular times of year. One key investor said that prices tend to grow throughout spring and hold for a few months, a pattern that was present in both 2017 and 2015. However the effects have been more serious since the likelihood of a no-deal Brexit has grown, with prices falling much more sharply in the spring of 2019 (UK House Price Index). 

Despite business leaders and financial experts, as well as many MPs and the majority of voters opposing no-deal Brexit (YouGov, July 2019), it remains the default outcome if an agreement is not reached. The Office for Budget Responsibility said that a no-deal Brexit could lead to house prices falling by almost 10% by mid 2021, while others think it could be as high as 20%.

It was important to note however that investors will always find the UK and London attractive. The prevailing opinion was that despite Brexit, investment will still find its way into the country with its lingua franca language and traditional system, as well as London’s solidified position in the global market. 

The discussion, led by trade, economic and political experts Dr Peter Collecott, Basim Al -Ahmaidi and Dr Alan Sked, helped the attendees to engage on various outcomes of Brexit and what might impact property values.

Basim Al -Ahmaidi, Co-Founder and Chief Relations Officer of Global Risk Insights, said  “I thoroughly enjoyed moderating this discussion, We explored the various scenarios that could unfold in the U.K. elections and the subsequent Brexit withdrawal agreement / UK-EU trade deal negotiations. The likelihood of these various election / Brexit scenarios were debated as well as its potential impact on the U.K. economy and real estate market. The long term fundamentals of the U.K. economy was also discussed , as well as the ingredients that attract global investors to the UK, including the rule of law, transparency and multiculturalism.”

GRI Club UK & Ireland will continue such pressing themes affecting risk/return strategies at the British & Irish GRI 2020 next 3-4 June.

Article by Matt Harris
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