Developer in Brexit warning over London property market

Developer in Brexit warning over London property market (iStock)

The property market in London is set for significantly reduced growth for a prolonged period because of Brexit, according to developer Landsec.

Chief executive Rob Noel said the remainder of 2018 will see a slowdown in activity as investors hold back from making significant decisions ahead of Britain's departure from the EU. 

He commented: “We are navigating uncertain waters in the near term and we expect investment and leasing volumes in the property market to be more subdued.”

Speaking as the company unveiled a pre-tax loss of £251 million for the year ended March 2017, he stated that the company will not seek to build offices in the capital except where a tenant is already in place, in order to cut its risks. 

Mr Noel said the slowdown in the commercial sector reflects the wider deceleration in property of all kinds in the capital since the June 2016 vote, which raised concerns about London's future status as a global financial centre. 

Landec has certainly felt the effects of this downturn, having posted a pre-tax profit of £112 million in the previous 12-month period. The company said the main reason for the drop this time round was its focus on cutting debts in order to make the business more secure ahead of Brexit, but it also noted that the value of its property assets had fallen 2.7 per cent year-on-year.

Those investing in residential property across the capital may also recognise the post-referendum slump that has seen London tending to lag behind other areas for property price increases and even for rental demand.  

Earlier this month, a survey by Paragon Mortgages found that London's residential landlords were the least optimistic about their prospects in the whole of England and Wales.

Only 26 per cent of landlords in central London were upbeat about their prospects for the next three months. This area saw the highest proportion of landlords cutting rents in the last year, with 27 per cent doing so. 

This pessimism contrasted with other regions, most notably the east of England, where 53 per cent were optimistic about the next quarter.