Cushman & Wakefield’s The Great Wall of Money report, published in March, said a record US $443 billion is being allocated to commercial property, globally. Post-Brexit, it is possible that an influx of foreign money could lead to increased demand for real estate.
Kriter, executive managing director at Cushman & Wakefield, suggested that institutional investors will focus on deploying their capital in the US and Canada until the implications of Brexit become clearer.
Historically, London has been attractive to foreign property investors, however the unexpected vote to leave the EU is widely expected to affect the property market in the UK.
Kriter said: “International investors take comfort in the fact that we have a stable, long-term majority government in place and like how the current strength in our economies in British Columbia, Ontario and Quebec are more than making up for the softness in Alberta due to oil and gas prices. International investors view Canada as an ‘island of certainty’ and are looking to place capital into commercial real estate across the Americas, Toronto and Vancouver.”
Anita Springate-Renaud, broker of record at Engel & Völkers Toronto Don Mills, supplements Kriter’s statement. She believes that Canada could see an immediate benefit from Brexit since investors view the market as being very stable compared to other countries.
She said: “It remains to be seen how these low interest rates and increased property values will affect Toronto and Vancouver’s already ‘hot’ housing markets when we add more prospective buyers to the mix; however, the general consensus is that Canada is viewed as a top-of-mind investment choice which demonstrates trust and stability in our economy and industries.”
In a blog post, Kevin Thorpe, global chief economist at real estate consultant Cushman & Wakefield, pointed out that the UK is predicted to experience a generally weaker economy, and that the EU could also potentially be affected.
He said: “In the UK and Europe, investment activity too is likely to face some short-term volatility as currency and capital markets react. Buyers and sellers will adjust their strategies. We are likely to see a flight to quality in the short term with opportunities emerging for those able to ride out the cycle.”
Thorpe added, however: “We are unlikely to see a rush to sell. Many private equity funds had liquidity buffers of up to 30 percent, which will minimise the impact of any short-term redemptions.”
He added that with uncertainty comes opportunity, pointing out that the UK’s market is robust and resilient.
He said: “It is a highly regulated, liquid and transparent market. The UK property market has been ranked a top five global investment market for decades; to be sure, some will see this as an ideal time to buy into a world-class market.”
On the contrary, Kriter believes that this is a good time to buy in Canada, saying real estate in the country is ‘on-sale’, with the value of the Canadian dollar having dropped to $0.76.
Cushman & Wakefield values over $100 billion worth of real estate each year in the UK and approximately $1 trillion each year across EMEA.