Brexit

Despite the political and economic backdrop, investors still see UK commercial property as a safe haven – for the time being.

Theresa May’s vision of Brexit will challenge the resolve of overseas lenders to UK property, but how many will be deterred?

International banks and financial institutions are making “worst-case” preparations to move up to 20 percent of staff overseas in anticipation of the UK’s withdrawal from the European Union, the chairman of the City of London’s policy and resources committee has warned.

Why, when a market is on the slide, its longer-term outlook shrouded in uncertainty and the risks around it mainly on the downside, would you decide to stick your money in anyway?

“We made an investment just a few months ago before Brexit happened. I was pretty nervous. No one knows what Brexit means; there is no detailed agenda and a lot of uncertainties. But when we were underwriting the risks, we still believed London will remain a metropolitan and important city. The fundamentals will not change overnight,” said Stanley Ching, head of Real Estate Group at CITIC Capital Holdings.

Investors' appetite of European real estate market is affected by the economic growth prospects and geopolitical risk.

UK bank lending to the commercial property sector is unlikely to be significantly affected by increased capital requirements in the wake of the UK’s vote to leave the European Union, according to a new research paper published by CBRE.

Three more investment managers today called a halt on redemptions from their open-ended UK real estate funds, bringing the total number of firms with frozen property funds in the wake of the Brexit vote to six.

Falling UK commercial property prices are likely to put pressure on several domestic and Irish banks, although the reduction of their exposure to the sector in the last five years means that their capital provisions have materially improved, according to an analyst report published by JPMorgan Cazenove.

Many experts believe that Brexit will create a flight to quality into US commercial real estate, but foreign money is likely to increasingly target secondary markets, one prominent real estate lawyer tells Real Estate Capital.