The High Court have ruled that that Prime Minister Theresa May must have parliamentary approval before invoking Article 50 and hauling the UK out of the European Union. DMZ looks at the immediate reaction of the ruling and what effect a Brexit reversal would have on London Real Estate.
A spokesperson for the government confirmed that it will appeal the decision, “the country voted to leave the EU in a referendum approved by Act of Parliament and the Government is determined to respect the result of the referendum.”
This means the case will be transferred to the Supreme Court in December this year. Ironically, if the Supreme Court is unable to reach a verdict on the government’s appeal, it will be forced to transfer the case to the European Court of Justice — the European Union’s highest court.
Political reaction from Labour leader Jeremy Corbyn was fairly straightforward, “Labour respects the decision of the British people”. Lib Dem leader Tim Farron (yes the Lib Dems are still knocking around) said he would “welcome the news that MPs will get to vote on the triggering of Article 50”.
The recent news comes off the back of a recently published article in the FT declaring the UK has surrendered top spot to Germany in European property investment, after data from Real Capital Analytics showed more investment flowed into German real estate than UK for the first time in 4 years.
So what would be the impact of a ‘non-Brexit’ on London real estate?
Estate agency Haart predicted that London’s residential market will be slow to recover from the Brexit vote after seeing sales spike in their regional offices, “London was the quickest to recover following in the 2008 recession. However, the multitude of blows that have befallen its property market over the last couple of months are obviously proving too much to bear” said CEO Paul Smith.
Developers don’t seem too affected thus far and probably won’t have any immediate reaction to the court judgement. This week saw the biggest property deal since Brexit, Abu Dhabi Financial Group completed their £370 million acquisition of the former New Scotland Yard HQ and have already appointed property developer’s Northacre to undertake the construction of a new mixed residential/commercial scheme at the site, which will be named ‘The Broadway’.
Brexit was never going to be a straightforward process and the new court judgement does nothing further than pile on further uncertainty to the future of London real estate in DMZ’s view. Accurate forecasting is usually based on the quantity and quality of historical data, two luxuries that are difficult to calculate in a post-Brexit/maybe not post-Brexit Britain. Julian Woolgar of Knight Frank puts it plainly, “it is very difficult to comment with certainty at present due to the issues around what the landscape will be while we go through the Brexit process.”
London Real Estate medium-term trends don’t appear to have changed a great deal since the June 23rd result: a slowdown in the ultra-prime £10 million+ market, gradual cooling of the London market versus the rest of the UK, lack of affordable housing for first time buyers and continued growth of the rental sector.
DMZ have heard from several sources in the market that deals are still readily available across both the the residential and commercial side, sales and rental.
So, things could be worse.