Oxford: Carter Jonas comments on EU Referendum result
Mark Charter, head of national property consultancy Carter Jonas’ Oxford office, comments on the EU Referendum result:
“With a vote to leave, the UK property market is unlikely to escape the wider economic instability which is anticipated over the coming months. However, recent volatility in the bond and equities markets reinforce the case for real estate investment, as property continues to provide long-term income stability and the ability to add value through active asset management. Looking forward, we firmly believe that fundamentals will continue to drive the UK property market. The UK has one of the largest and most sophisticated property markets in the world and because of this it should remain a magnet for global occupiers and investors.
Residential
“While values may soften over the coming months in response to a more uncertain outlook, sharp price falls are not foreseen, given the general lack of stock. Over and above this result, the UK housing market faces a number of domestic challenges, most notably shortages in affordable housing and general supply issues. These are matters which have taken a back seat during the campaign and still need to be addressed. The high-end market may be impacted by weaker demand from senior executives and international buyers in the short term, however, a fall in sterling could make UK property an attractive proposition to foreign investors, and moreover, property yields currently offer a healthy margin over bonds.
Commercial
“Commercial property, particularly in London, is seen as a stable safe haven asset. Its attractiveness as an investment opportunity is supported by the stability one of the world’s most secure democracies. In the long term, it is unlikely that a vote to leave will change this. However, in the short term, it is inevitable that the vote will create uncertainty across the business community which will impact on the commercial property market and lead to a decrease in values and rents. Uncertainty as to how free movement provisions are affected may lead to businesses delaying relocation or expansion plans until the outcome of negotiations are clear. Further, the UK is often used as platform to access the EU, and the vote to leave could encourage organisations to relocate to more suitable locations.
Rural
“The possibility that direct payments to farmers may now be reduced, if not removed completely, has the potential to impact greatly on the rural property sector and, in the short term, lead to pressure on rents and land values. However, the vote to leave is just one of a number of factors currently affecting the market. The recent fall in commodity prices and the oversupply in other areas of production are all playing their part in the reassessment of values. Conversely, there is the potential that lower land values could attract farmland investment from the UK, as well as international, buyers. In addition, a weaker sterling should improve UK exports. Further, whilst much remains uncertain, land, as a tangible and resilient asset, often thrives in times of adversity and a flight to land, as a safe haven should not be ruled out.
Planning and development
“The potential loss of access to funding for major infrastructure and regeneration projects in the near future will be of great concern to the planning and development sectors. EU funding supports some of the UK’s poorest regions, and a number of significant infrastructure projects such as Crossrail. There is the potential that the UK may now lose this support which could place additional pressure on the public sector to find alternative funding.
“Some commentators have suggested that the planning system may loosen, particularly in respect of Environmental Impact Assessments. However, it is unlikely that we would adopt a less stringent approach to EIAs, given that the UK leads the world in this respect.”
