Brexit would be bad news for UK real estate market, survey shows

An exit from the European Union would be very bad news for UK real estate, with only 3% of investors believing a so-called 'Brexit' would be a positive move, according to a survey by law firm Nabarro.

Victory for the Conservative Party in the recent general election ensured a referendum on the UK’s membership of the European Union would take place before the end of 2017.

The first survey of real estate investors to be held since the election has revealed that an exit would be bad news for the UK commercial real estate market, Narbarro said. Participants in the survey represent £400 bn of assets.

Only 3% of respondent believe the impact of an EU exit on UK real estate would be positive, with 64% believing it would be bad for the market. Major concerns voiced related to short-term business disruption resulting from a break with Europe, combined with the negative signal that this would send to international occupiers.

In spite of the uncertainty nearly three quarters of those polled (72%) said they would not delay investment decisions ahead of an EU referendum – and most respondents remain sceptical that Britain will exit the European Union.

This is in contrast the marked slowdown in the Scottish property investment market prior to the referendum last year on whether Scotland should leave the UK.

In 2014 the Nabarro poll found strong opposition to Scottish independence, with 81% saying they would be less likely to invest in an independent Scotland. Ultimately, the Scottish public voted to stay within the UK.

With independence no longer an issue in the short-term, the survey polled investors views on the rise of the Scottish National Party in the wake of its spectacular results in the general election.

Only 3% said they would be more likely to invest in real estate in Scotland as a result of the rise of the SNP, with 65% saying they would be less likely to invest.

Ciaran Carvalho, head of Real Estate at Nabarro, said: 'It is clear from the survey results that the commercial real estate sector does not want the UK to leave the European Union. At the moment this possibility is not affecting investment decisions, as most remain sceptical that it will actually happen. However, just as the Scottish Referendum race became close over time, there is a chance that the campaign for Britain to leave the European Union will gather momentum as the vote nears, which could lead to a slowdown in activity.'