Make sure you have not one but two key dates on Brexit in your diary.
The first is the date of the referendum: 23 June. The second should fall in the second week of July when the Q2 investment figures roll in. Only then will we know the cost of uncertainty.
It is just 103 days until the ballot boxes are opened. Paddy Power may be predicting a remain vote (it is offering 1/3 on that eventuality) but the result feels too close to call. More so than in any election, many voters will enter the polling station with their minds yet to be made up. Anything could happen.
Where you will find unanimity of view, however, is around the impact that the uncertainty of the outcome is already causing. Too many buyers and sellers are – understandably – sitting on their hands until it is clear where the UK’s future lies.
Brexit dominated talk on and off the platform at Wednesday’s Scottish Property Federation conference in Edinburgh.
And it was there in Savills’ preliminary results announcement on Thursday. “At this stage,” said chief executive Jeremy Helsby, “we retain a cautious view on some Asian markets, particularly the tier-two Chinese cities, and we expect the UK residential and commercial investment markets to be subdued, for the former, as stamp duty reforms take effect and, more generally, in the run up to the EU referendum in June.”
It was also there in the opinion polls, whose results are starting to trickle in. This week we learned, for instance, that hotel industry professionals are divided on whether Brexit would have a positive or negative impact on their sector, according to this year’s European Hotel Market Survey.
Research teams are ramping up their activity too. “For long-term real estate investors (such as sovereign wealth funds and family trusts), the much-discussed European referendum could prove to be little more than a storm in a teacup,” says Colliers International.
Economists, naturally, are weighing in too. “The G20 was probably right to include UK exit from the European Union on its list of potential risks to the global recovery, especially given the precedent of the eurozone crisis in 2011-12,” acknowledges Capital Economics.
And pollsters, their general election wounds finally healed perhaps, are re-emerging. Stressing that it is too early to call the result definitively, YouGov has the “remain” camp ahead. “The public see leaving the EU is seen as a risky option, which would have a negative effect on jobs, the economy and British influence,” it says.
As you might expect, we have put Brexit at the top of this year’s Estates Gazette Power List. How could we not? And whether we stay or we go, the UK real estate market is already interrupted. The vendors of two prime City buildings put on the block for a combined £280m just this week may disagree, but they will soon find out the extent to which demand has been affected.
If the UK stays in, a Q3 rally is inevitable, though in Scotland, which faces the double whammy of the EU referendum and the fear of “Indie Ref 2”, investors may continue to wait and see. And even south of the border the pause may continue until September given the inevitable summer lull, Eastdil Secured’s Ian Marcus suggested at the SPF conference.
But what will concern many advisers, buyers and sellers most is what is happening now. Or rather what is not happening now.
Brexit is bound to dominate many conversations at MIPIM next week, an event where the UK contingent may well be the largest country block for the first time. The irony…
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