Just over six weeks ago, IPE Real Estate held its annual conference and awards in Amsterdam.
Delegates from Europe and beyond filled the ballroom of the refurbished Krasnapolsky hotel to hear of the disruptive forces at play in the real estate sector. The possibility of the UK’s departure from the European Union was of course one of them.
The subject of migration was also addressed, with the general consensus being that the global movement of “human capital” was, despite recent rhetoric to the opposite, a positive for the built environment.
But with Brexit deemed at the time somewhat unlikely, there were no serious worries for the outcome of the 23 June referendum; a vote to Remain seemed the most probable scenario.
Now, there is concern that the 52% vote in favour of the UK’s separation from the EU could trigger the unravelling of Europe. Headline writers have already turned their attentions to the next member states, coining ‘Frexit’ for France and ‘Dexit’ for Denmark (even the somewhat comparatively awkward Italian ‘uscita’ could gently morph into uscITA).
While the word “contagion” has been avoided, fallout across Europe’s real estate and infrastructure sectors is now being highlighted as a potential risk. Countries deemed Eurosceptic, are, says Capital Economics, more likely to experience less investor demand for commercial property.
Andrew Jones, head of infrastructure debt at AMP Capital, says there may be a risk that Brexit could create economic pressure across Europe and “potentially further afield”.
“The worst-case scenario is that Brexit sparks further euro-zone unrest, which could have the potential to disrupt the European Union as a whole,” Jones says.
Joe Valente, head of European real estate research and strategy at JP Morgan Asset Management, has previously argued that the EU is more likely to suffer investor “vengeance” in a post-Brexit world than the UK.
Which brings us back to the host country of this year’s conference and awards, The Netherlands, where anti-immigration politician Geert Wilders has pushed for a “Nexit”. Such moves are more likely to dissuade than persuade international investors from parting with their capital.
Until the end of this month holding the EU presidency, Dutch prime minister Mark Rutte has ruled out a referendum.
What’s next for the rest of the continent is anyone’s guess.