Are the risk effects of Brexit on the property market being overestimated
The debate on Brexit and its effects has extreme perspectives differing on all ends. Many are still confused and oblivious to the various industry sectors’ reactions to the risk effects. To outline whether the Brexit risk effects on the property market may or may not be overestimated, we address the top 3 looming questions about the overall effects Brexit will have.
1. How can we restructure supply chains?
Numerous businesses have left or plan on moving from, the UK in preparation for Brexit. On one extreme, industrial storage facilities and units are being stockpiled with items to avoid negative costs post-Brexit will ensue. For example, our neighbour GlaxoSmithKline has been stockpiling vaccine and medicine supplies. However, along with the businesses that have relocated, key professionals such as logistics coordinators have been vacating.
This means that parts of the industrial property market may do well in the short-term, but the long-term effects of increased job vacancies will create unbalanced issues for the industry.
2. Will immigration slow to a halt?
We know that Brexit erects borders for EU citizens that previously had less business/work barriers to entry in the UK. The construction and development, hospitality, healthcare and senior care homes, and student housing sectors may be affected by Brexit since they heavily depend on EU workers.
The drastic shift in immigration to emigration could leave large parts of the property industry very quiet.
3. How will foreign investors continue to view London property?
The cloud of uncertainty has been dreadful since the Brexit vote was announced and a couple years later a no deal Brexit is more likely in the horizon. While some affluent boroughs (such as Kensington and Westminster) in West London are seeing some declines in property value, other boroughs particularly in East London (such as Hackney and Southwark) are continually rising in value. Even our borough, Hounslow has been steadily increasing in property values. Overall, Bloomberg has found that despite the great cloud of uncertainty over the past couple of years, there has been no change in London’s median property price.
It can be said for commercial property specifically, that Central London, Zone 1 real-estate will have evergreen value. The new prime locations can be expected to be in proximity to the soon-to-be-completed Crossrail stations. Nonetheless it is still reasonable to react to the uncertainty with caution, thus we can also expect rentals to be favoured.
To conclude, the shock of Brexit when the vote was announced in 2016 created great clouds of confusion which assumed devastating effects. Years later we are still anticipating a ‘deal or no deal Brexit’ but in contradiction to overestimated negativity, London has not fallen into a dark recession and has managed to maintain value in the property market. Whilst there will probably be a gap post-Brexit when the market needs to adjust, we can remain hopefully that the property market will pick up sooner rather than later.
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