In the run up to and fallout from the Brexit referendum, uncertainty as to the future of London’s economy and Britain’s on-going relationship with the European Union caused a sharp decline in investor confidence throughout the capital as potential investors waited for the ramifications of the vote to become clear. Now, as the UK starts to reaffirm its position as an independent body in the business world, and political uncertainty plagues much of Europe with the same issues as experienced here in the months surrounding the referendum, that situation appears to be reversing itself.

According to Savills Plc., European investors collectively spent around £1.7billion on offices, warehouses and other commercial properties within the capital this year through April 18th, accounting for 31% of the market as reported by Bloomberg. For the same period in 2016 those figures sat at £824million and 14%; the improvement is clear for all to see.

So, what is driving this influx of returning investors? After all, Brexit is far from complete, with many terms of the international breakup still to be negotiated, yet investors no longer seem overly deterred. The answer to this particular question is broad, and relies upon a few factors.

Firstly, a weakened pound has caused property prices in London, a city historically known for being rather expensive, to plummet, opening up the market to a wide array of businesses. Pound Sterling has dropped 10% versus the Euro, resulting in a significant change in pricing which is a definite lure for foreign investors.

Beyond that, it all seems to boil down to politics. With Britain now beginning to stabilise following the Brexit vote, and the expectation that the recently announced snap election will serve to solidify Theresa May’s claim to leadership, thereby strengthening her negotiating position with the EU, the hazards here in the UK are seen as more predictable than the woes of mainland Europe.

“If anything, the snap election call in the U.K. decreases uncertainty regarding property values in London,” said David Hutchings, the head of European strategy for property broker Cushman & Wakefield Inc. “If, as expected, May comes out stronger and in a better position to negotiate with the EU, our Brexit will be softer.”

Over on the mainland, recent events such as the success of nationalist Marine Le Pen in the first round of France’s presidential elections have caused further uncertainty. There is also the fear that her success will encourage other anti-EU parties throughout Europe, setting the stage for, you guessed it, more uncertainty. In light of all that, Britain seems to be a fairly secure location for investment, relatively speaking.

“Elections in France and Germany, and possibly in Italy next year, mean that there’ll be a certain degree of uncertainty vis-a-vis investing in Europe for a prolonged amount of time,” said Hutchings. “And due to changes that may come via Trump, the U.S. is no longer a natural alternative to London for European buyers. Trump and Brexit taught us all not to be complacent.”

Ronald Dickerman, founder of Madison International Reality LLC, also commented that, “The commercial-property market in London is 10 times the size of Frankfurt and nobody, not tenants nor investors, want to leave. Brexit just made London an even better place to invest.”

Sam Bonson

Sam is an aspiring novelist with a passion for fantasy and crime thrillers. He is currently working as a content writer, journalist & editor in an attempt to expand his horizons.
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