The real estate sector includes a diverse community of business interests which may be affected in many different ways by the UK exit from the EU.
To date, commentators have focussed on demand for inward investment, the impact of exchange rate fluctuations and wider political and economic challenges. Many consider that the future will be shaped by the nature of the new UK-EU relationship and until this is resolved uncertainty will remain. However, in the short term, Brexit appears to be delivering mixed fortunes for UK real estate markets with certain sectors performing better than others. Whilst there are opportunities for overseas investors and private equity funds to capitalise on market volatility, concerns as to pricing remain and available stock remains low. There remain legitimate concerns of a potentially negative impact on market confidence and some damage to investment performance. However, commentators are largely optimistic about the underlying fundamentals of the UK property market. Whether the UK is in or out of the EU, it is likely to remain a safe-haven investment destination.
The legal implications largely stem from the approach the UK Government will take to the areas of EU regulation that apply to UK real estate by virtue of membership of the EU. These are primarily in the areas of State aid, procurement rules and merger control, planning requirements such as environmental impact assessments, AIFMD and energy efficiency measures. In many areas the current integration of EU and domestic law makes it difficult and of questionable benefit to unravel the whole and the Government is likely to be tempted to tackle the more over-complex and contentious areas first.