Property firm warns on Brexit threat to London economy

LONDON, July 7 : (AFP) – 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.