Property investors cut or stopped purchases of commercial property in London this year as Brexit negotiations lurched from crisis to crisis.
Spending on UK offices, malls and warehouses plunged more than 40 percent in the first two months of the year to 4.3 billion pounds ($5.6 billion), according to research firm Property Data. With less than three weeks left before the UK’s scheduled withdrawal from the European Union, buyers are watching to see if the attempts to prevent a chaotic no-deal withdrawal will succeed.
While the UK Parliament prepares to vote on Prime Minister Theresa May’s latest Brexit proposal, about 6,000 UK real estate professionals gather on Tuesday for the annual MIPIM conference on the French Riviera. In previous years, this was typically a flurry of deal-making, but this year’s gathering in Cannes will be held under a cloud of uncertainty.
“I don’t think there are too many investment committees out there who want to commit a large amount of capital when there is a belief that within 30 days all will be clear,” Andrea Orlandi, a managing director in charge of European real estate for the Canada Pension Plan Investment Board, said in an interview.
The wait-and-see attitude has translated into reduced sales and delayed leases. Purchases of City of London offices were almost a third lower than the five-year average in the first two months of the year, according to Savills Plc. Leases for space in the financial district dropped 42 percent in January from a year earlier, the broker’s data show.