Brexit spells an opportunity for investment, the UK Property industry has declared this week. As negotiations between the country and the European Union prepare to unfold, a range of bodies within the industry have emphasised the positives that could come out of the scenario.
The British Property Federation published a manifesto this week, highlighting five goals for the government’s negotiations: to maintain access to the right skills and talent, establish new trading relationships beyond the EU, maintain access to the EU market for goods service, create the conditions for a modern flexible economy, and to maintain business confidence to ensure continued investment in the UK.
Indeed, commercial real estate is one of the fundamental building blocks of
the UK’s economy, with the BPF noting its “key role to play in ensuring a positive future for the UK outside the EU”.
“Encompassing a vast range of essential economic and social infrastructure, it provides the professionally-managed rented homes in which many people live, the commercial space in which virtually all types of businesses operate and the shopping centres, restaurants, cinemas and more in which people spend leisure time,” notes the report, also highlighting the domestic and overseas capital that it attracts in the renewal of towns and cities.
At present, the market value of UK real estate is £1.6 trillion, representing 21 per cent of the UK’s total net wealth, while real estate contributes £94 billion annually to the UK economy – 5.4 per cent of GDP.
While the UK’s housing shortage is a key issue for the industry, with the BPF manifesto highlighting the reforms still needed in the planning system, it also emphasises the importance of a “fair, stable and predictable” tax system in stimulating investment in real estate.
The Property Industry Alliance has also highlights the improvements that Brexit could bring for tax, noting that VAT has previously been constrained by European law. Indeed, with foreign investors now owning 28 per cent of UK commercial property, excluding housing and student accommodation, there is potential to encourage further demand in the future.
“It is critical that we do not sit and wait to see what a post-Brexit world might look like,” Bill Hughes, chairman of the PIA, told Property Wire. “We have the chance to shape our real estate industry for the benefit of the UK.”
The comments arrive as all eyes are on the UK this week, with Prime Minister Theresa May heading to the US to become the first foreign leader to meet Donald Trump since his election as President of the United States.
American investors, though, do not need to be told about the opportunity that Brexit can offer: Properstar says that US buyers are already stepping up their investment in UK real estate, thanks to the attractive exchange rate between the dollar and the weaker pound.
“Following the election of Donald Trump, we have seen a steady rise in the number of US citizens searching for property abroad. Property searches, on all countries in our network from the US have gone up by 18 per cent over the past 30 days to 12th Jan compared with same period last year,” Shameem Golamny, MD of the firm, tells OPP.Today.
“Similarly to Brexit, experts predict for the political shakeup to continue to have an impact on the property market. Since the election, the top three destinations for US buyers are Canada (30 per cent), the UK (20 per cent) and Mexico (5 per cent), with most searches originating from California, Florida and New York.”
“It also seems the UK is doing a pretty good job of getting the message out that it is still open for business post the Brexit announcement,” he adds. “Apple is creating a new HQ at Battersea Power Station, Google has committed to new London offices and just this week Snapchat have announced they are opening their international HQ here. There’s a lot to draw workers and families to the UK for what might seem like a better life. With the exchange rate so favourable it might make the gamble slightly easier to take.”