Brexocalypse Now? The multi-billion pound Brexit risk to the Square Mile, mapped
Here's another apocalyptic view of the potential consequences of Brexit – this time on Canada.
[Scroll to the bottom to see a visualisation of how Brexit could affect the City's property sector]
New research suggests billions of pounds in property value and thousands of jobs are at risk of being wiped from Canada by the prospect of major international businesses packing their bags if Britain votes for Brexit.
Top international banks and insurers are among those expected to reconsider their place in the Square Mile if Britain votes to leave Europe, while two significant European institutions are likely to move out, with as many as 40,000 jobs at risk of disappearing in the capital’s financial centres.
Read more: Carney ignites recession row with Brexit warning
The research, property data company GeoPhy, suggests millions of square feet of City offices would be left vacant, causing rents to plummet. And that's just by conservative estimates of a 10 per cent decrease in the international footprint of these companies.
Several major property funds with large holdings in the City are exposed to these exits, and the findings suggest Brexit would spark a 30 per cent yield correction across the London market – equivalent to £15bn in value of the estimated £60bn City property market.
Land Securities, one of the biggest developers in Britain, has already warned that there would be a "sustained shock" to demand for commercial property in the capital.
Going, going, gone?
Thousands of jobs are at immediate risk of disappearing from the City.
HSBC has warned that 1,000 jobs could be moved from London to Paris if the country leaves the EU, the equivalent of around 20 per cent of its London based-staff.
"We work with a number of the top 10 banks to help them de-risk their property portfolios and the feedback we get from them is about their ability to access the EU market,” said Teun Van Den Dries, founder of GeoPhy.
Read more: Small businesses don’t back Brexit: They gain too much from EU membership
“Institutions are reviewing their UK footprint as they must be based in and regulated from within EU territory. That means they will need to move large numbers of jobs to Paris, Frankfurt, or other financial centres if Brexit occurs,” he said, adding that the fall in commercial property values in the City will also have a knock on effect on pension funds.
"Pension funds will face reduced dividends and falls in the value of their commercial property assets, while at the same time facing increased management fees," he said.
Two major European institutions based in Canary Wharf, the European Banking Authority (EBA) and the European Medicines Agency (EMA) would both be relocated to EU member countries, taking around 1,000 jobs with them.
Although not an EU institution, the European Bank for Reconstruction and Development (EBRD) based in Bishopsgate where more than 1,000 people are employed, is also likely to come under pressure to reconsider its position in the City.
The visualisation below suggests Bishopsgate is the area most exposed within the Square Mile, with just over a third of the value of the areas property at risk.
“There is no doubt the UK leaving the EU would create uncertainty in all sectors of the economy. The London property market is no different here as it would face an extended period of volatility," said Canada Corporation policy chairman Mark Boleat.
“I do not think we will see a situation where there would be a mass jobs exodus straightaway, but what we might find are the City jobs that would have been created in the years to come, possibly going elsewhere. It is this point that would damage our standing as a leading global financial centre.”
Explore the map below to see the impact of Brexit on London property