Brexit Decision to Force Hand of Leisure Property Industry

The UK has voted to leave the European Union. Before the EU referendum, commentators were trying to predict what the effect might be on the UK’s property market.

With its current high level of investment and development, the fate of London’s property market was of special interest, with house prices expected to fall. But how might Brexit affect London leisure property?

A complex market

Modern restaurant property development isn’t an island. An increasing amount of leisure space comes in mixed-use facilities. These are popular since the varied revenue streams offer owners and landlords some insulation from precisely the kind of market shock we saw on the 23^rd June.

Recently London has seen huge mixed-use development projects, such as at Nine Elms and Arsenal. This has seen the construction of thousands of square feet of leisure property. The success of these projects does not lie solely with the premiums that restaurant spaces can command, however.

Their success also depends on the availability of skilled builders to construct the developments – many of whom have come from Eastern Europe in recent years. For years the UK construction industry decried the lack of skilled apprentices taking up the trade. However, will leaving the EU impact their jobs? Well, probably not if they are in contracted, full-time work.

Mixed-use property also relies on the property market remaining strong. If it crashes as the IMF expects, this could slow or halt future such developments, having an important knock-on effect on the UK’s otherwise burgeoning dining industry.

Finally, the leisure industry as a whole is dependent on spend through a recession. Therefore, the leisure industry is dependent on the banking and finance sectors.

If the UK does plunge into recession following Brexit, will it survive? According to Barclays, Q3 and Q4 2016 will see negative growth, but is expected to turn positive again in early 2017.  With only a short recession, perhaps the UK leisure industry can weather the storm.

Some positives of the result

There could be more positive consequences for the market, too.

The result, which was in the balance for so long, has been settled, allowing the market to plan for the future after a period of instability. Agents who have been holding back until a decision came, one way or the other, may now act in numbers, leading to a spree of sales in the city.

There could well be a rush of investment from London from Europe, as parties with long-term interests in London act now to capitalise on the single market regulations before Brexit makes cross-national affairs a much more arduous task.

Finally, if the pound does drop to say 90% the value of USD the UK could see an influx of tourism and spending could increase in the sector.

If Brexit has affected your property portfolio, speak to us at Restaurant Property today to see how our services can assist your future strategy.

Call 020 7935 2222 or email enquiries@rparchive.thisisthetreedev.com.

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