U.K. Elections Bring Uncertainty, But Not Expected to Derail CRE

Kevin May Director, GRS Group (310) 614-9329kmay@grs-global.com @kmay_grs

Kevin May
Director, GRS Group
(310) 614-9329
kmay@grs-global.com
@kmay_grs

Businesses, commercial real estate firms among them, are usually not very thrilled about elections. After all, a change in political parties, or newly elected politicians, can have an adverse impact on the economy. At the very least, a degree of uncertainty can give investors pause.

This hesitancy is happening in the United Kingdom with elections taking place today. But it doesn’t seem as if the sky is falling on commercial real estate, especially in London.

CBRE UK points out that just because an election is taking place, there is no reason to think that there will be negativity in the market, and says that during any point in the political cycle, policies could impact commercial real estate. The firm also reports that most commercial real estate investors are very aware that if policies impacting their industry are put into place, they can take a very long time to come to fruition. The United Kingdom is also considered a safe haven commercial real estate, despite Brexit.

Despite several big elections, office leasing in Central London has been at the strongest since 2006. There could be a bit of second-quarter weakness, but CBRE argues that the leasing market is usually much more impacted by GDP growth than political elections.

As far as project planning goes, past elections have not shown any major decreases or delays in development. The bottom line is that unpopular projects are going to see some delays despite the outcome of a particular election. Many firms also generally take care of their planning before an election takes place, according to CBRE.

Some commercial real estate observers say a majority win by the Conservative Party would be better for the industry than a Labour win.  Although there are concerns that international investors will focus primarily on London and not put as many dollars toward other cities, transaction activity hasn’t waned since the election was announced and Barclays Bank is still forecasting growth.

There could be some similarities to the United States, which has not seen a major hit on the commercial real estate market since President Trump’s election, though there has plenty uncertainty on what policies will negatively impact CRE.

So, just because an election is taking place, it’s not a done deal that it will negatively impact the United Kingdom’s overall economy, which is what ultimately impacts commercial real estate.

Comments are closed.