July 4, 2016
What now for commercial property post-Brexit?
Never has the future been so uncertain since the UK's decision to leave the European Union on 23rd June. Financial markets have slumped, there is turmoil at Westminster and could we really be heading down the road of a second independent referendum in Scotland?
Despite all of this good old bricks and mortar still appear to be a sound investment for your money, and IME is here to help.
Nearly two weeks ago the UK voted in favour, 52% to 48%, to leave the EU. Many were shocked and surprised by the outcome, not least the Prime Minister, David Cameron, who rolled the dice and in doing so gambled his own political career in the process. He lost and will stand down as PM in September consigned to the back benches. The UKIP leader, Nigel Farage, was triumphant after reaching his lifelong goal of leading the UK out of the EU, whilst the Labour Party, which was already in a deadly tailspin, is all set to crash spectacularly unless its leader, Jeremy Corbyn, does his own 'Jexit'. Meanwhile Nicola Sturgeon, leader of the SNP, has remained stoic and firm over her country's position. Within hours of the result she called it "democratically unacceptable" that Scotland should be faced with the prospect of being taken out of the EU against the will of its people after the country voted overwhelmingly in favour of remaining in the EU. Crikey, what a mess.
And if this was not enough we have seen billions wiped off the value of the stock market, inward investment deals halted, threats to relocate thousands of jobs out of the UK and fears that the UK economy is heading back to the dark days of the financial crisis. Calming words from Mark Carney, Governor of the Bank of England, dispelled the notion of a banking collapse,though, swiftly after the shock vote. The banks' cash reserves are 10 times greater than they were pre-2008; in other words they have a safety net of large proportions to avoid the tax payer having to lower the proverbial life raft. Thank goodness for Carney's sedate perspective out with the hullabaloo and chaos of Westminster and Holyrood.
But all of this means one thing: uncertainty. Uncertainty for our economy, uncertainty for the country's political future, including that of the potential for a second Indyref, and uncertainty for our investments. Whilst gold is often seen as a safe haven during times of uncertainty, bricks and mortar is also viewed as a solid investment for a balanced portfolio of investments. There is potential, therefore, that we may see people opting to invest more in buying commercial property than judging which way the FTSE is going to go.
The Scottish property market has witnessed a raft of new investment over the last 18 months with Russian, Indian and even Korean money appearing. The fundamentals in both Edinburgh and Glasgow remain strong with both cities noting a resurgence in both investment and office take-up. 2015 saw 1m sq ft of office space hoovered up in the Capital during 2015, its highest ever figure. According to most recent statistics, Glasgow's Q1 office take-up has exceeded 300,000 sq ft and may smash 500,000 sq ft this summer if all pipeline deals conclude. And of course the fall in value of the Sterling against the Euro and the Dollar may well encourage further inward investment into Scotland where there's still value to be found.
For IME's part in all of this we see a bright future ahead, albeit with more than a few rain clouds along the way. Regularly we deal with people from all over the EU including Poles, Lithuanians, French, Italian and Spanish migrants who often wander into our head office at Tollcross looking for assistance. Quite often it is in their search for new business premises to set up, perhaps, their first venture. You can read a story here where one French lady, Marie, sought IME's help and now runs one of Morningside's favourite eateries, but there are more just like her. In a city where foreigners often do not receive the property service they require IME is always willing to listen and help to source, sell, buy, manage or even refurbish a property. So, much will depend on how businesses, including ours, reacts to the challenges and opportunities posed post-Brexit.
Contact a member of our Agency Team on 0131 290 2350 or email@example.com and remember we are right behind EU.
Please note none of the above constitutes financial or investment advice.