UK commercial property sees partial recovery after Brexit slump - RICS

LONDON (Reuters) - Demand from British businesses for commercial property has partly recovered from its slump after June’s vote to leave the European Union and foreign investors are looking to take advantage of the weak pound, industry data showed on Thursday.

A general view is seen of the London skyline from Canary Wharf in London, Britain, October 19, 2016. REUTERS/Hannah McKay

But the quarterly survey from the Royal Institution of Chartered Surveyors also detected signs that some companies in London and other parts of the United Kingdom are expecting to move away from the country.

Several major property funds halted investors from withdrawing their investments in July, making the sector the most visible casualty of the Brexit vote.

RICS Chief Economist Simon Rubinsohn said a rebound in demand for property by firms seeking space for their operations showed the economy was proving resilient, at least for now.

Net occupier demand rose to +12 between late September and early October, up from zero in July’s release but still below pre-referendum levels. Investment demand also recovered from a record fall in the previous survey, helped by foreign buyers.

“Overseas buyers look to capitalise on the opportunity to buy prime assets, given the significant discount provided by the weak pound,” RICS said.

While foreign investors grew more interested in commercial real estate in central London, British businesses were less upbeat about expanding in the capital and Scotland.

“Anecdotal evidence suggests that political uncertainty is still having an effect on both these markets,” RICS said.

Britain is due to begin two years of EU exit talks early next year. Some firms, especially in financial services and car-making, fear they will lose easy access to EU staff, suppliers and markets.

Around 14 percent of commercial real estate agents said clients were considering relocating some activity away from the United Kingdom. The proportion expecting relocations over the next two years hit 47 percent in central London and rose to 71 percent in Northern Ireland.

Of RICS’s overseas members, 30 percent in Germany, Ireland and Poland said they had received enquiries from British firms considering relocation.

Reporting by David Milliken; Editing by William Schomberg