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Brexit : Five Key Insights for the global Real Estate sector

Following the UK’s landmark referendum decision to leave the European Union, real estate investors have been dealing with the push and pull of post-Brexit market sentiment. Initial panic surrounding the outcome of the vote saw a raft of UK-based fund managers suspend redemptions from property funds worth £18bn[1] as investors looked to exit the asset class. Confidence in the residential sector also took a hit. Although as the dust begins to settle, forward looking indicators look a little less gloomy, with twelve month price and sales projections nudging back into positive territory[2]. For UK commercial property, the picture looks less rosy with Q2 2016 showing a significant deterioration in market sentiment visible across both investment and occupier sides of the market with uncertainty pushing rental and capital value projections into negative territory[3].

While it’s still early days to come to concrete conclusions on how the UK’s Brexit decision will impact the real estate sector, our global real estate experts at Mazars have mapped out five important considerations when assessing any challenges and opportunities likely to face strategic players, partners and competitors in the international real estate sector in key global locations; the UK, Germany, France and the US.

  1. With property values and currency issues exercising minds in the UK, investors should not forget to factor in demographic and social trends that are having a fundamental impact on the UK property sector. Read more
  2. Don’t underestimate the power of trading links to ensure that relationships between EU members and the UK remain mainly favourable, but priorities could change when it comes to tech start-ups looking for an innovative and cost-effective base. Read more
  3. While a mass exodus by financial services firms in the UK is unlikely, having strategies in place to mitigate potential disruption, as well as using the opportunity to widen property investment hori-zons will be key. Read more
  4. Focusing on the degree of risk in real estate portfolios should be top of investors’ agendas, but decision making may be hampered until there is more visibility on the political outlook following forthcoming elections in France and Germany. Read more
  5. While high levels of uncertainty remain, investors should take the chance to look at other real estate locations and vehicles that can offer potential in order to compensate for any fallout global real estate may suffer post-Brexit. Read more

[1] http://www.bbc.co.uk/news/business-36783428
[2] Residential Property Survey 18/6/16 from the Royal Institution of Chartered Surveyors (Rics)
[3] Commercial Property Survey 20/7/16 from the Royal Institution of Chartered Surveyors (Rics)

Shahab Moreh

Global Real Estate Leader

Shahab leads Mazars global Real Estate Practice. He has more than 25 years of experience providing audit, financial reporting, and advisory services, and specializes in delivering such services to the real estate industry. His clients include SEC registered real estate investment advisors, real estate private equity funds, institutional investors, Real Estate Investment Trusts (REITs), residential builders, commercial and residential building owners and managers, as well as shopping center and hotel developers and operators. Shahab frequently applies agreed-upon procedures to validate the financial track record of real estate operators and developers and consults on evaluating provisions of partnership operating agreements to provide assurance on applicability of profit allocations and cash flow distributions. He has extensive experience with real estate investment companies and in fair value measurement of real estate across all property types. Shahab consults regularly on financial reporting matters to ensure compliance with U.S. GAAP and International Financial Reporting Standards...

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