Commercial Property

Central London office values to fall as much as 20% on Brexit

Deutsche Bank says UK’s exit from Europe will hit office values hard

Central London office values will probably fall as much as 20 per cent this year as the economy slows and investors are deterred by uncertainty in the face of the UK’s exit from Europe and increased business rates, according to Deutsche Bank. (Photograph: Stefan Rousseau/PA Wire)

Mon Mar 6 2017 - 12:01

Central London office values will probably fall as much as 20 per cent this year as the economy slows and investors are deterred by uncertainty in the face of the UK’s exit from Europe and increased business rates, according to Deutsche Bank.

Spending on properties in the British capital slowed sharply before and after the June 23rd Brexit referendum as investors and occupiers shunned the market, Simon Wallace, head of research for Deutsche Bank Europe, wrote in a report Monday.

He predicts the trend will continue this year, with values declining by 15 per cent to 20 per cent. “The anticipated economic slowdown, in light of rising inflation impacting private consumption, will likely have a material impact on real estate occupier and investment demand throughout the remainder of this year,” Wallace wrote.

“Furthermore, the future relationship between the UK and the European Union remains uncertain, weighing on business sentiment, particularly now that access to the single market is now in doubt.”

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Investment in London offices fell 17 per cent last year to £15.9 billion, according to research complied by Savills. Vacancy rates in the City of London, the capital’s main financial district, climbed in the second half, Savills said.

International businesses may move as many as 100,000 jobs out of London within two years of when the UK officially starts the process to leave the EU because of concerns that businesses will lose access to the single market passporting rights, according to Jefferies Group analyst Mike Prew.

Bloomberg

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