Brexit fails to destabilise Birmingham’s booming commercial property sector

FEARS that next month’s EU referendum could destabilise the West Midlands’ booming commercial property investment market have proved unfounded, experts have said.

According to latest statistics from Knight Frank, not only is the region bucking the national trend, investment volumes in Q1 of 2016 are ahead of those at the same time last year.

Nationally, volumes are down 27% from £18.5bn in January – March 2015, to £13.6bn in the first quarter of this year.

But in the West Midlands, Knight Frank has reported a rise in investment levels from £1.02bn in Q1 2015, to £1.1bn in the corresponding period this year.

Ashley Hudson, who heads the Birmingham office of Knight Frank and the capital markets team, said: “The doom-mongers widely predicted that fears about Brexit would halt commercial property investment in the regions.

“In Birmingham and the West Midlands this simply hasn’t been borne out.”

Among the headline deals completed in the first quarter of this year were Hammerson’s £335m acquisition of Grand Central in Birmingham, and M&G’s £200m commitment to fund Three Snowhill.

However, while investment volumes across the region have been maintained, Mr Hudson said some investors had nevertheless got the ‘jitters’.

“We have seen a pause in overseas investment as people await the outcome of the vote in June. The UK institutions are also adopting a watching brief, and only investing in defensive long term stock,” he said.

He said that of the deals that were progressing, some were the subject of so-called ‘Brexit clauses’.

Ashley Hudson, head of the Birmingham office of Knight FrankMr Hudson (left) said: “Some of the deals have been made contingent upon the outcome of the referendum. I’ve not seen anything like this in 20 years of providing commercial property investment advice.”

However, he maintained that while overseas investors and the UK institutions are keeping their powder dry, private equity houses, leveraged property companies and REITs are gearing up to fill the void.

“The institutions and overseas investors have deep pockets and have been formidable buyers in the race to acquire assets in the last 12 months or so. As they vacate the market, other investors are sensing their opportunity to move in,” he said.

“What we are seeing, however, is that interest is strongest in smaller lot sizes – sub £10m. The market for £75m plus is looking a little thin right now and some sales are sticking.”

In the longer term, he said he was confident that the market would bounce back.

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