Professional Report

predicts that share prices for leading U.K. property companies and funds will not only recover, but find more rational investment levels following the intense run-up on values over the past half dozen years.

“Many commentators,” Danks said, “have long predicted that an adjustment in pricing at the top end of the investment market, particular in Central London — across all property sectors — was long overdue.” In addition, given the low interest rate environment that is likely to endure for the foreseeable future, Danks expects an increase in merger and acquisition activity from major international companies. He further pointed to Marillyn A. Hewson, Lockheed Martin’s chief executive, who recently commented that exporting from the U.K. could become more attractive, with Lockheed already seeking the U.K. as a place to invest.

Consumer Confidence is
Key

These real and significant economic scenarios notwithstanding, LeMarechal contends that consumer confidence will be the ultimate barometer of U.K. stabilization. She posits that the change in currency rates post-Brexit will likely make the U.K. more accessible and thus attract visitors, with hotels and eateries in tourist areas seeing the benefit, which in turn, could boost real estate values. “But it remains too early to tell how consumers and businesses will feel about their long-term prospects,” she said.

With copious sources of capital globally seeking a place to land as the U.K. market reconfigures, industry leaders anticipate an even greater investment emphasis into the U.S. real estate markets. The Brexit impact is extending to other countries as well.

“On the positive for the German real estate professional, our industry will profit,” said Thorsten Wolf, SIOR, Prokurist, Berendes & Partner Consulting GmbH, Hamburg. “Cities like Berlin and Frankfurt are likely to see a higher influx of foreign companies making investments, pushing up rents and demand in the German office and industrial markets. The first clear indications are already emerging.” Time, indeed, will provide more clarity. But with the summer months coming to a close, the industry consensus is that starting in September, we will start to see whether the dire predictions of Brexit will come to pass.

Danks, for one, sees reason for optimism, pointing to the £ 67 billion invested last year in the U.K., one of the world’s most stable, highly developed, and best regarded property markets. “It is therefore highly unlikely to collapse,” he said. “Adjustments will be made for sure, but perhaps that is not such a bad thing.” However events unfold, it’s clear that the Brexit vote has forced significant issues to the forefront, presenting both challenges and opportunities. As LeMarechal said, “it’s too early to call,” but given the inherent nature of real estate markets — and the nearly unprecedented amount of global investment capital looking for a place to land — the U.K.’s decision to leave the E.U. may slow some activity in the short term, but trigger new deals and agreements far sooner, and with more efficiency, than the pundits initially expected.