Despite June’s Brexit vote, real estate lawyers are confident foreign investment will continue to be a lucrative source of work. Marialuisa Taddia reports.
Three months on from the EU referendum, it is still too early to assess the impact of the Brexit vote on commercial property. The market took a hit in the immediate aftermath, when some of the country’s largest property funds closed and prices at many tower developments in the capital plunged. But the signs are confidence is gradually returning.
The sector is big-money: the invested and owner-occupied commercial market grew 11% to £871bn in 2015, a record level, surpassing the previous peaks of 2006 and 2007 respectively. The amount held by investors increased by 9% to £483bn, the Investment Property Forum (IPF) said in August.
One of the biggest contributors is the influx of foreign capital, particularly in London. Overseas investors now account for 28%, or £135bn, of UK investment property, up from 17% in 2007, with 77% of their holdings in the capital. They already dominate the City office market with 61% of investment property and have been expanding into London’s West End and Midtown office market, the IPF says.
It is no surprise that ‘market forces’, rather than regulation, have been driving work for firms, as Nabarro senior partner Ciaran Carvalho observes. His clients include UK real estate investment trusts (REITs), among them Hammerson, Great Portland Estates and Land Securities.