London developments paused as Brexit aftermath sets in

by: Fiona Nicolson
  • 28/06/2016
  • 0
London developments paused as Brexit aftermath sets in
The UK’s exit from the European Union has created ripples in the property development market.

A report by the FT.com reveals planned property developments have been paused following the UK’s decision to leave the EU after 51.9% of the country voted out.

The chief executive of Axa’s real estate investment division confirmed prior to the referendum, that development of a 62-storey City skyscraper would be on ice while awaiting the outcome and that he would be reviewing options in the event of a vote to leave the EU.

The Crown Estate, which manages property belonging to the Queen, also reported that it was planning to review two London developments in the pipeline: Morley House and Duke’s Court. Planning consent has been granted for both projects, but construction has not yet begun.

A Deloitte real estate survey, published in mid-May, showed that the capital’s construction business was booming, with 51 new construction starts recorded – the highest figure in the survey’s 20-year history. This lifted the total amount of office space under construction to 14.2 million sq ft.

However, the plan to depart from the EU may now create a lull for developments.

Colliers International said that occupier confidence and demand could stall, while companies review the effect of Brexit on their businesses.

Commenting on the outcome of the referendum, Walter Boettcher, chief economist and director of research and forecasting at Colliers, said: “New uncertainties arising from the vote may begin to crystallise UK commercial property late cycle risks and we foresee some pricing adjustments across core and non-core assets.  These will have a knock-on effect with some investors who may well continue in the ‘wait and see’ mode in the short term at least.”

 

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