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Property firm warns on Brexit threat to London economy

London-focused property firm Great Portland Estates warned Thursday that the capital`s economy would suffer a "negative impact" from Brexit.



London-focused property firm Great Portland Estates warned Thursday that the capital`s economy would suffer a "negative impact" from Brexit.

"It is likely that the uncertainty created by the EU referendum result will have a negative impact on economic growth in London," said chief executive Toby Courtauld, whose company manages a property portfolio worth £3.7 billion ($4.8 billion, 4.3 billion euros) in the capital.

"In the near-term, we expect confidence to reduce and some business investment decisions to be deferred whilst negotiations to establish our trading arrangements with the EU are undertaken."

He added in a trading update that "we can expect London`s commercial property markets to weaken during this period of uncertainty" -- during which Portland would face "reduced rental growth prospects".

Britain`s real estate market has emerged as one of the hardest hit sectors from the country`s shock June 23 referendum decision to leave the 28-nation European Union.

Three more British commercial property funds suspended trading on Wednesday on a wave of redemptions triggered by the Brexit vote, meaning six funds have now halted trade with assets totalling around £15 billion.

The Bank of England had warned Tuesday that Brexit risks to Britain`s financial stability were "crystallising" -- and cited London`s "overstretched" commercial real estate market as a cause for concern.

In the wake of the referendum, London`s upmarket estate agency Foxtons cautioned that profits would be hit this year by the surprise result.

Fears are growing that Brexit could spark a slump in the London`s property market, which has benefitted from the BoE`s record-low interest rates for more than seven years.

Prior to the referendum, there were already signs that the high-end London property market was slowing after the government hiked taxes on transactions aimed at preventing a bubble.

 

From Zee News

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