EU Referendum would hit London Office Values say Industry Experts

Posted on 26 March, 2015 by Chris Grigorovsky

Industry experts have warned that central London office values could fall if Prime Minister David Cameron holds a referendum regarding the UK’s European Union membership.

Skyscrapers in City of London( Lloyds of London Tower 42 Aviva and the Gherkin)

If he is still in power after the election on 7 May, Mr Cameron has promised a vote on the UK’s EU membership by the end of 2017.

Joe Valente, head of research and strategy at JPMorgan Asset Management, told the Independent that during the run-up to the vote investors will hold off buying property, leading to the possible scenario of foreign buyers holding off for months.

Mr Valente went on to say that “The inevitable result is that we’re going to lose some pricing, because that weight of capital isn’t there”.

Foreign buyers accounted for three quarters of the £19.4 billion of central London traded properties last year. If the UK quit the EU, 60 per cent of investors surveyed by CBRE said they would be less inclined to put their money in the country.

According to BNP Paribas, central London office rents will climb 17 per cent this year, which is the biggest jump since 2000.

Knight Frank reports a a 16 per cent increase in the value of City of London offices to £1,471 per sq ft last year. The West End also saw a rise of 10 per cent to £2,867 per sq ft.

John Feeney, managing director and global head of commercial real estate at Lloyds Banking Group, says that “There’s been this sense that the UK has been a safe haven for a very long time and that’s clearly attracted a large share of global capital. If that’s undermined somewhat, a lot of clients feel that could have an impact”.

The Labour Party, which is  currently neck-and-neck in  opinion polls with the Conservatives, has  also shared its concerns about an exit, saying that if the UK left the EU then it would affect job numbers, trade and the economy.

Mahdi Mokrane, head of research and strategy at LaSalle Investment Management, said: “The UK is by far the most liquid and transparent real estate market in Europe.

“With a Brexit, that would put a lot of investors back to their drawing board and we think their strategy is probably going to be a pause”.

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