Investment deals for UK commercial property that were under way in the run up to the EU Referendum are holding up well with London transactions in particular showing little evidence of being impacted in terms of price or completion, according to Cushman & Wakefield.
Cushman & Wakefield has found that across the UK close to two-thirds of deals have exchanged or continue to proceed. A further 11% are in renegotiations or have returned to the market - and are therefore set to proceed. Just 16% of transactions are not proceeding.
The 16% figure is up on the 5% to 10% that Cushman reports normally do not proceed.
A higher proportion of deals in Greater London have exchanged or sold (67%) compared with the rest of the UK (59%).
Across Greater London a further 17% of transactions are in renegotiation or have returned to the market - and are therefore set to proceed. In Greater London, just 9% of deals are not proceeding.
In the rest of the UK a higher proportion (23%) of transactions are not proceeding.
Nigel Almond Head of EMEA Capital Markets Research at Cushman & Wakefield said: “We cannot say [the vote] is having no impact but at any given time 5% to 10% of deals would fall away for whatever reason, be it an investor is running a number of deals and decides to focus on only a few or something comes through on the search.
“Some buyers are looking to chip away at deals but it is not a massive proportion and there is limited evidence of prices having fallen.”
There have been concerns that the decision of a number of UK retail funds to gate their property funds may lead to sales at significant cuts to original prices with Aberdeen Asset Management in particular notable for seeking speedy sales.
But Almond said this area was unlikely to have a major impact on the market.
“We have found that as a proportion of the market those funds that were frozen had less than 3% of the total UK market.”
Just over half of assets have exchanged or sold with no adjustment to price. Of those with price reductions, the adjustment was less than 10% of quoting prices.
As expected the deals most likely to fall away are for secondary or tertiary assets or where the lease remaining is short.
Almond said that while lending margins to commercial property had risen due to the “heightened risk” the corresponding fall in swap rates over the period meant the all in cost of debt remained stable while loan to values were only marginally lower.
Cushman & Wakefield has been tracking over £8bn of transactions across the UK that were in the market on 23 June with the majority of these in offices and retail. Two-thirds are in London and the South East.
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