More than half of companies and individuals that invest in the UK’s commercial property market would be against the country leaving the European Union, claims a new survey. Many would even reconsider doing business on this side of the Channel.
In a report undertaken by global property consultants CBRE 60 per cent of investors quizzed said leaving the EU would make the UK a less attractive place to buy commercial property. The 387 sample included some of the largest sovereign wealth funds and insurers across Europe and North America. Thirty-three per cent said a Euro-exit would make no difference to their investment strategy, while four per cent thought it would make the UK more attractive.
The UK’s commercial property market — which saw £53bn worth of deals agreed last year — relies heavily on global investment with about half of sales made to foreign buyers. “A large proportion of investors were worried that leaving the EU could lead international businesses to re-evaluate how much of their European activity they wanted to retain in Britain, the region’s largest property investment market,” commented Peter Damesick, chairman of CBRE’s European research team.
“The UK outside the European Union would potentially clearly lose some of the benefits and advantages of being part of the EU free-trade bloc,” he added. “Ultimately that’s going to feed through to the strengthened diversity of property demand in the UK’s commercial property market and on that basis that would be a concern to investors.”
Following a recent Association of Foreign Investors in Real Estate survey which named London as the city with the best real estate investment opportunities for foreign investors — overtaking last year’s first choice of New York — its chief executive, James Fetgatter, said: “It’s very easy to invest in London, there are no restrictions, the tax regime is good for foreign investors. And it’s an international city so it attracts a lot of European, a lot of Middle Eastern and Asian money.”
As part of his general election strategy, David Cameron has promised to renegotiate the terms of the UK’s EU membership and hold an “in-out” referendum if he is re-elected in 2015.
It’s a double-edged sword that not only recognises the fact that Britain could, one day, cut its ties with Europe but one that is making many of London’s bank and fund managers increasingly uncomfortable.
Liz Peace is chief executive of the British Property Federation (BPF). “London benefits hugely from its role as one of the few truly world cities and so it is natural people want to live in and invest in our city,” she said.
“In a world where increasingly the opportunities are international, we should be careful we are not seen as sending out the wrong signals that the UK is becoming more parochial and protectionist, which could have negative consequences for overall investment in Britain and London’s place as one of the world’s great cities.”
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