Within days of the Bank of England governor, Mark Carney, calling for an EU referendum to be held as soon as possible, one of Britain’s biggest property consultancies has warned that any delay “could leave a permanent cloud of uncertainty over the economy”.
In its Market Outlook for May, Knight Frank says that in recent weeks we have seen one political uncertainty — the election result — swapped for another, the outcome of a future referendum on the country’s membership of the European Union.
And given last year’s slowdown in Scottish property transactions during the run-up to the independence referendum, “It seems a near certainty that the property market will similarly slow ahead of a future poll on leaving the trade block,” cautions the agency’s chief economist, James Roberts.
The Outlook lists the three biggest dangers of an EU exit:
“While all this occurs, the market will live in a state of uncertainty, and a share of business is probably going to be placed on hold, or ironically perhaps disappear to continental Europe,” said Roberts, who comments in the report: “We would, however, expect commercial property to see less impact than highly liquid investments like equities and bonds, where money can move at the push of a button.”
On the plus side, he adds that much of the overseas investment in UK property — at least in the larger unit market — looks as though it is here for the long-run, a fact underlined by the interest shown in major development schemes.
“Were it not for the EU referendum,” Roberts says, “the outlook today for UK commercial real estate would be very different. Unemployment is low, total employment rising, wages are increasing in real terms, and there are signs that many of the UK’s trading partners are returning to growth.
“This is an upbeat scenario. However, from a pure business perspective, the sooner the referendum is out of the way the better.”
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