The result of Thursday’s general election in the UK has increased the uncertainty surrounding the country’s real estate markets.
The failure of the Conservative Party to achieve a majority of seats in parliament ahead of Brexit negotiations was generally seen to be a negative outcome for the property industry.
Melanie Leech, chief executive of the British Property Federation (BPF), said: “This is not the outcome the country needed going in to the Brexit negotiations or in terms of setting a clear direction for the UK’s future.
“Businesses don’t like uncertainty and there will clearly now be a further period of uncertainty, which will be unhelpful.
“Whilst there may be further uncertainty at a national level, BPF members will continue to work with local leaders, including the newly elected Mayors across the country, to invest in local communities – and we stand ready to work with whatever shape of government now emerges.”
Hayley Scott of Investec Structured Property Finance said: “Today’s election result will have a major impact on the real estate market as well as the wider economic landscape.
“A number of proposed new projects may indeed be put on hold as the property sector takes stock of this result. Banks are likely to be cautious about financing new developments.
“Real estate as an asset class will lose favour with institutional and overseas investors as doubts hang over the UK real estate sector.”
Melville Rodrigues, partner at law firm CMS, said: “In the context of a hung parliament and the new government having to progress the Brexit negotiations, there may be challenges for fund managers – challenges particularly for managers operating on a pan-European basis and their access to target investors.
“This could result in a Brexit bifurcation, in terms of capital raising and fund structuring. Managers should consider adopting parallel operations, one EU-focused and the other a UK domestic solution.”
But there were some expressions of optimistim among the pessimism.
Manish Chande, senior partner at Clearbell Capital, said: “This is not the result that many were hoping for and it may create some short term volatility, but the underlying factors that make UK real estate attractive remain, as demonstrated by the activity we saw after last year’s Brexit vote.
“However, a period of political uncertainty will bring renewed instability to the markets. This will likely act as a drag on occupational markets, but may serve as an unexpected catalyst to the investment market disconnect we had expected would be triggered by Brexit.”
Colin Wilson, head of UK and Ireland at Cushman & Wakefield, comments on today’s General Election result: “The result makes strategic planning for business harder and this could result in some decisions being delayed.
”However, if there is a lesson from our experiences over the last 12 months, it is that UK business, including the real estate industry, has become accustomed to uncertainty and managing through it – as evidenced by the many significant investment and occupier commitments since last June. Leadership, clarity and unity are the three things that business will be looking for now.”
James Roberts, chief economist at Knight Frank, said: “While it is easy to assume the certainty of a clear majority government would have been the best outcome for the economy, actually this result has several positive points.
“Firstly, the government will probably need the support of several other parties, not just the DUP, to get any future Brexit deal through Parliament, in order to offset any Tory backbench rebellions. Consequently, the pendulum has swung against hard Brexit, as a compromise deal will have the best chance of commanding broad support in the House of Commons.
“Also, on a day-to-day basis the next government will be restricted to putting consensual, not controversial, policies through parliament. This probably rules out any more populist taxes on property, or increases in business regulation.”