Brexit has caused a sharp decline in investment demand for commercial property in the UK, according to a leading survey, with London most severely affected.
Most chartered surveyors surveyed by RICs said that the commercial property market in the UK is in the early stages of a downturn, with more than half of respondents saying that London especially facing recession.
Investment was worse affected by occupier demand, especially investment demand from overseas, which fell to –27 per cent. Investment demand in London fell to –41 per cent, the weakest since 2009.
Occupier demand was also down for the first time since 2012, but the amount of available space did not increase, which means prices have remained stable and may even continue to rise, if demand improves.
Office rent is expected to decline 3 per cent in the next year because of the impact of the results of the EU referendum on business confidence.
“Political and economic uncertainty in the aftermath of the referendum result has clearly dampened sentiment in the commercial property market, with the tone becoming visibly more cautious right across the UK,” said Jeff Matsu, senior economist at Rics.
“Although the impact is widespread, the drop in confidence has been most pronounced in London.
"Nevertheless, following several years of strong capital value and rental gains, momentum had already appeared to be slowing. Whether or not the sharp deterioration in the Rics survey data is a knee-jerk reaction that will unwind as the result is digested, or the start of a more prolonged downturn, remains to be seen," he said.
An earlier survey showed that the number of people looking to buy a new home dropped to its lowest level since 2008 in April.
In London, surveyors were 22 per cent more likely to say that property sales would fall rather than rise in the next 12 months.
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