Watch out, London: Brexit could mean fewer new homes as investors eye up Paris and Berlin
Houses, hotels and office blocks may start sprouting up across London at a slightly slower pace this summer, as a survey of top property investors revealed investment in real estate will take a temporary knock in the event of Brexit.
KPMG asked 25 global property investors, with combined portfolios of more than $400bn (£281bn), about their investment plans for the next few months at last month’s Mipim conference in Cannes, the flagship week-long soirée for Europe's top real estate honchos.
Two-thirds of the select group said they would trim investment in UK property if Britain votes to leave the European Union, while they assess what the post-Brexit landscape will look like, whether demand for property will hold up and which direction house prices will go in.
In the event of a prolonged back-and-forth between Britain and Brussels, investors told KPMG they will start looking at new projects in Germany and France, with London’s rivals Berlin and Paris tipped to be the top winners.
Most firms are going to keep up the investment drive right until the final moment, despite the concerns of uncertainty, with only one in three saying they will trim investment before the referendum.
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“While our analysis shows that the period to June is causing a hiatus for some, it’s the period of uncertainty after a ‘leave’ vote that investors are telling us is the real concern," said Andy Pyle, UK head of real estate at KPMG.
“Arguably the more important risk is the potential social impact. If a Brexit dents the rate of housebuilding, the housing crisis will worsen,” he added.
Figures out last month showed 142,390 new houses were completed in 2015 – up 21 per cent on 2014.
Any slowdown in new builds, however, is expected to last only while negotiations about a British exit are ongoing. Only one-third of investors said they would be less likely to invest in UK property over the long-term if it were not a member of the EU.