How Brexit affects Real Estate
Uncertainty rises with only two days to go until the UK EU referendum in which British citizens will decide whether they want to stay in the European Union or not.
Investors are expectant as the result will entail significant implications for the UK´s economy, along with the relationship with its main trading partners and the rest of the world. The hospitality sector seems especially vulnerable. More than 95 percent of hotel property and investment professionals favour a remain outcome for the referendum, according to a poll conducted amongst leading hotel professionals in London. A more restricted free movement of people could harm the hospitality and retail sector significantly due to the lack of migrant labour it would imply. We had the pleasure to talk to Peter Gold, Head of Cross Border EMEA Retail, CBRE, who explained the main effect a reduced free movement may have „We can assume that in the short term we will see a lack of supply of people willing and able to support all areas of hospitality, which can have a long term impact of the increasing price of labour and as a result, the price of all hospitality. Hotels, catering, and restaurants will find themselves having to charge more or work on reduced profitability, as the result of the increasing cost of labour.“ However, the impact of Brexit in the UK is not the only concern, as many fear the message it will convey to other European countries. Gold explained how the UK leaving the EU is likely to cause a ripple effect „It is a Considerable vote of no confidence in the EU. It will therefore destabilize the EU and the euro, and encourage those who have fostered nationalistic perspectives in the past to pursue them.“