Press releases

Brexit and UK Real Estate - week two

08 July 2016

Deloitte Real Estate experts comment on how Brexit is affecting their industries two weeks after the leave vote.

David Brown, partner and head of real estate tax, said: “No change in direct tax considerations as Brexit vote brings no immediate changes to the current position under EU Directives or double taxation agreements; this will be all to play for as UK negotiates its exit from the EU. The Chancellor has begun to lay out his broader fiscal response and we anticipate that raising taxes on commercial property investment might be a lower priority over the next period given the change in market sentiment. However, the domestic tax agenda continues with the release this week (5 July) of the ‘offshore property developer’ legislation.”

Valuation and Audit
Edwin Bray, valuation partner and head of real estate in the Midlands, said: “Positively, communication within the valuation industry remains strong. This, combined with regular client contact, has helped to ensure that there has been no knee-jerk reaction on pricing. That said, there are areas of concern. Funds are expected to be hit by pricing discounts, and there is currently a lack of transparency surrounding fund redemptions. City centre developments will be under closer scrutiny, as will investments reliant on an asset management angle, or those with voids.”

Clive Pane, partner and head of planning and development at Deloitte Real Estate, said: “Developers are still taking stock of recent events, but it is clear that an air of caution now prevails. While residential sales activity has not entirely dried up, there are examples of overseas investors walking away from deposits, while domestic buyers appear to be holding back, and online listing portals are reporting weaker activity. In the longer term, the major mixed-use regeneration schemes are still likely to go ahead, albeit with some delay. There has been relatively little news from the commercial developers, yet a few have gone as far as to mention they are reviewing schemes. However, for the London focused developers at least, much will depend on the capital’s ability to retain large financial services businesses.”

Mike Cuthbert, partner and head of construction advisory at Deloitte Real Estate, said: “Recent purchasing managers’ index readings for the UK construction sector have begun to point to contraction, although this being a sentiment-driven index, there are risks that it overstates the pessimism in the market at present. Nevertheless, there is an expectation that demand will start to slow, but in the meantime, a combination of relatively tight capacity and weaker Sterling is serving to push up costs.”

Public Sector
Vicky Smith, partner at Deloitte Real Estate, said: “In the public sector, real estate activity is continuing without pause and, if anything, the need to slim the property portfolio could take on renewed significance in the new environment. The government is continuing its plans to consolidate many public sector employees into hubs situated around the UK.”

Real Estate Occupiers
Martin Laws, partner and head of occupier consulting at Deloitte, said: “Initial eyes are inevitably on the financial services sector for its reaction. Many of these organisations are no doubt starting to review the balance of their UK/non-UK European locations. But broader economic forecast concerns are potentially proving to be just as big a driver for headcount re-planning as are any locational impacts of Brexit. In reality, until the actual Brexit out-turn model is fully revealed, many corporates are entering a period of stasis, but with a lot of scenarios being modelled in the background."


Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see for a detailed description of the legal structure of DTTL and its member firms.

Member of Deloitte Touche Tohmatsu Limited.

Sue Gibson
Deloitte LLP
+44 020 7303 3156
+44 078 5539 9368

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