A commercial property market is a subdivision of the estate market as a whole, it deals with land, holdings and property used for commercial purposes. It entails warehouses, office buildings retail stores and so on. Commercial estate markets are more complex and extensive than the residential property markets, as they have more Collaborators and more factors are at stake. In a growing economy like the UK, demand for commercial estate investments continues to rise.
The impact of Brexit on the Commercial Property Market
The Brexit referendum of June 2016 sent shock waves and concerns about the effect it would have on the UK’s economy. It created a lot of uncertainty in the market and the most obvious and immediate effect was the fall of the value of the pound. The commercial investments market of the Uk being resilient showed a slowdown and a downturn was noted in the investments of the commercial property market post-Brexit.
This trade deal reduced the currency risk for international investors, smoothening the capital and investment flow in the commercial estate of the UK. There was a renewal in demand for commercial property for sale London after the weaker takeups recorded in 2020 due to the lockdown.
The financial institutions of the UK are based on a solid foundation, They weathered the Brexit storm quite well and after the initial panic, the markets have now stabilised. Also, the trade deal between the EU and the UK helped to restore a lot of clarity in the market regarding the future of the relationship between the two.
Opportunities in the Commercial Estate Investments
The property market in the Uk is considered to be a good investment. It may decline or fluctuate in the short term but is expected to rise in the longer term, this environment keeps the investors’ money in the property market safe and secure.
Despite the slowdown, rents remained stable Two thirds of all commercial estate investments in the UK were from foreign investors. As the sterling fell it became beneficial for investors abroad to take advantage of the favourable commercial estate rates. Brexit drew the interests of financial and property market investors from countries in the Middle East and Asia.
The estate market of the UK offers transparency and liquidity in its dealings, an extensive and highly skilled labour market and ease of doing business. A research report on the final impact of Brexit finds that ‘The UK, especially London, has been a financial centre for centuries. Its legacy, skilled labour, language, culture and time zone relative to other financial hubs will support the sector’s long-term health.
A commercial real estate impact report has been submitted by RICS, broadening the opportunity for commercial estate and bringing solutions to the challenges faced by this sector through policy measures. The high-quality and well-managed commercial estate is integral for balancing UK towns and cities effectively and also for providing better spaces and facilities to the locals.
The UK commercial property sector promotes businesses and local jobs that can bring crucial contributions to the economy. ‘ The sector’s contribution is equivalent to 3.3% total of UK gross value added(GVA) and generates 2.5%in tax revenues and the employment of 3.5% of the UK workforce through direct, indirect and induced activity’.-RICS Commercial real estate impact report.
Final Thoughts
Post Brexit how has the Property market of the Uk fared? While in the EU house prices are rising and the rates are up by 39.3%, their counterparts in the UK are also not far behind. The prices have risen by 30.8 % since the referendum was posed first-time buyers in the UK can relax at the pace of growth in prices since Brexit seven years ago.
A continued period with low-interest rates and significant financial incentives across the region during the COVID-19 crisis has led to cumulative savings and restricted new supply, compounded by the pandemic has seen a rise in prices.
The markets received a major boost with several large corporations pledging their long-term future to this region, like Unilever, ITV, and Intercontinental Hotel Groups. The declining vacancy rates and increasing rates of Offices spaces are the indicators that the tenant demand across the country remains strong.
