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28 June, 2022updated 12 Aug 2022 16:00

‘Nando’s did not run out of chicken’: Six business voices on Brexit’s impact

It has been six years since the UK voted to leave the EU. Six executives, predominantly across real estate, assess Brexit's impact.

By Sebastian Shehadi

Despite recent years of pre-pandemic austerity, we have got a heavily indebted central and local government. The hundreds of billions of pounds the UK government spent supporting public services, households and business during the pandemic has caused the public sector deficit to reach a peacetime high.

Brexit also means that direct EU funding has been lost and inbound talent from Europe has been depleted. As a consequence, we need a renewed focus upon education and training in order to enhance the relevance of the domestically sourced labour force and ensure continued access to creativity and innovation. 

Against this background, private long-term capital will have an increasingly important role to play in investing in a productive economy, which connects excellence in higher education with world-leading business, while producing the built environment that society needs in order to thrive.

Sascha Lewin, CEO of W.RE, a real estate developer and asset management company that has delivered more than £1.6bn of assets across the UK and Germany

Six years post the Brexit referendum, London hasn’t lost its status as a global financial and business centre. We did not see a mass exodus of skilled European workers rushing to Paris, Frankfurt or Amsterdam and Nando’s did not completely run out of chicken. 

Yet, to date, little of the promised upside is evident and significant friction remains in agreeing our future relationship with Europe and asserting our post-Brexit role on the global stage. The UK commercial property industry weathered these uncertain waters well. Investors and occupiers have remained cautious but are generally optimistic about the future of the UK. Most see long-term opportunities offsetting current risks, yet it is clear that we are not quite out of the woods.

Tomáš Jurdák, partner and head of real estate at MiddleCap, a private investment holding

Just two days before the Brexit referendum, I agreed terms on a £250m office sale in the City of London, with a four-week completion target. We were as shocked by the poll results as the buyer, and we had to spend many days working together to evaluate what the referendum outcome meant for the UK economy, its real estate market and the UK’s role in international politics. Eventually, we made the decision to move forward with the acquisition. It was our first major real estate deal in the UK after the referendum.

So, did Brexit have any effect on the UK real estate market? In my opinion, real political harm came from how and when the Brexit agreement was negotiated, which slowed down the entire real estate market, delayed investment decisions and minimised lease activity. This, in combination with other negative news such as endless quantitative easing, Donald Trump’s presidency, the Covid-19 pandemic and the war in Ukraine, threatened not only real estate but the whole liberal economy and democracy.

Jay Squier, executive director at Native Land, property developer and co-investor with a £3bn portfolio of projects since 2003

Demand for prime UK office space has been remarkably resilient since Brexit (the early stages of Covid-19 aside). Initially, there were fears about businesses scaling back relocations to the UK, yet many top companies, including tech giants Facebook and Google, have committed to significant leases since the referendum vote. We have not yet seen insurmountable construction supply chain and labour shortages, but the truth is that we are only just starting to see the full picture emerge.

Native Land focuses on delivering innovative, sustainable buildings of the highest quality. For these we are seeing strong demand, with secondary space coming under continued downward rental pressure. These trends of businesses wanting the very best space to retain and attract talent were evident pre-Brexit, furthered by the Covid-19 pandemic and will continue as a long-term trend. The UK is a key hub for climate innovation. Improvements in ESG credentials will help to support its office market as businesses seek buildings that match their corporate values and those of their staff.

Brexit has not impacted the UK’s continued emergence as a life sciences destination, centred around Oxford, Cambridge and London and highlighted by the country’s role in developing one of the main Covid-19 vaccines. We are seeing a move from biotech firms into city centres, where the supply of high-quality post-graduates continues to grow and is unaffected by Brexit.

Despite then Chancellor of the Exchequer George Osborne’s warnings that UK house prices could fall by up to 18% post-Brexit, the actual impact on the residential side has been muted. Across the prime residential market, growth was initially slow but growth nonetheless. At Native Land we certainly found that, for the right product, there was still strong interest from both investors and buyers.

In fact, given the challenges faced by the sterling, those based overseas actually saw it as an opportunity, and we saw strong demand from domestic buyers. Despite the uncertainties of both Brexit and Covid-19, we sold out of all our residential stock in 2020 – achieving sales of more than £100m. Post-pandemic, the residential market is looking buoyant as people give greater scrutiny to where they live and the quality of their surroundings.

Dan Silverman, co-founder of Spacemade, the flexible workspace operator

At the time, people put the boost in demand for flexible workspace post-Brexit down to the referendum result, saying that companies wanted more flexibility given the uncertainty. However, we strongly believe that both Brexit and Covid-19 have been short-term (although major) drivers that have pushed forward a pre-existing structural trend for businesses to want greater flexibility.  

Across the investment industry, there is a growing interest in operational real estate. We are getting more and more calls from asset owners interested in pivoting their space from traditional long-term lets to a more operational model – partnering with an operator such as ourselves to create bespoke, flexible workspaces – as they see the potential for better returns. Given the increasing uncertainty and growing recession fears, investors are looking to have a more active management over their assets – which is why we always partner directly with building owners.

Ned Williams, managing director, Evans Randall Investors, a private equity real estate business

The Brexit referendum came at a critical time for two of our central London office projects, Bureau and Thavies Inn House. In both cases, we remained confident in the long-term occupational outlook for prime City of London offices and indeed chose to invest more ambitiously in those schemes. This approach bore fruit alongside the wider London market resilience where we have seen depth of liquidity and demand for the best projects at an investment and occupational level – [however] this may have recently been somewhat tempered by broader economic challenges.

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