Cairo-Over the past days, reports on real estate news have pointed that demand on British properties dropped to its lowest level since the global economic crisis that hit markets in 2008.
Sales of luxurious houses in London have dropped by 43% during the days that followed Brexit, along with a sharp decline in the British construction industry during May.
In line with these results, analysis and surveys showed that many European cities are nominated to capture the British real estate position especially in the business, tourism, and leisure sectors.
Indexes in the first post-Brexit survey showed that offer of properties in the United Kingdom, has promptly declined for the first time since 1998. According to the same survey, the number of experts who expect real estate price rates to drop to their lowest level in five years within the three coming months has also increased, a real sign of the Brexit’s repercussions on the real estate sector.
While experts suggest that real estate funds will increasingly suspend their work and trading in Britain, many European cities make efforts to attract those investors through additional temptations. It is worth mentioning that, till this date, seven big funds have announced the suspension of their works.
According to analysts and surveys in the sector, Brexit will have a positive impact on the price of properties in Frankfurt, amidst many expectations that international banks will move their offices and a number of their employees from London to other European cities like Frankfurt, Paris, and Amsterdam.
A recent survey by Ernst and Young Company that included 555 companies working in the real estate sector, has also showed that 70% of them see that Frankfurt will be the biggest beneficiary from Brexit, and that the city will witness a jump in property investments, which will support the price rates of property and rental, while 13% of the surveyed companies prefer Dublin in Ireland, and 6% expected Paris to be the top destination.
Experts estimate 100,000 people will lose their jobs in the financial services sector within the coming post-Brexit years, a move that would contribute to enhancing the role of Frankfurt, Paris, and Dublin as the most financially attracted destinations.
Economic analysis by British experts published in the past few days expected office rental rates to decline within the three coming years by 20%, a reminiscent of the world financial crisis, when the British real estate prices dropped by 40% following the withdrawal of funds by investors in the real estate markets and companies, which have led to the paralysis of many property projects.
On the other hand, other expectations highlighted that Istanbul is also nominated to attract a big share of real estate investments, especially Arab investors who left London. Analysts noted that the luckiest sectors are tourism, leisure, and assets investments.
However, the turmoil that took place in Turkey during the past week, has weakened the country’s chances of becoming a real estate hub at least within the remaining months of 2016.
Canadian properties also benefited from the tension in the British market as expectations said that price rates will jump by 12.4% in their prices’ rates supported by the investments flow out of the United Kingdom in line with the stability of Canadian interest rates amidst the global economic fluctuations. According to a specialized report by Royal LePage, the average price of the house will increase to reach CAD563,000 instead of CAD434,000, especially in Toronto and Vancouver.
As per conditions in the United Kingdom, the construction sector has witnessed a sharp drop in May before the referedum, which points that this sector has positively affected the Q2’s economic growth. The British Office for National Statistics said in a report that the construction sector’s productivity, which represents 6% of the British economy has dropped by 2.1% in May compared with 2.8% in April.
This sharp drop highlights the challenges faced by the construction industry prior to Brexit and expected it to grow in line with the decline of demand and the weakness in the market’s activity.
Brexit raised concerns for recession and uncertainty on Britain’s trade relations, which pushed the pound sterling to drop to its lowest levels since the mid-eighties, before it partially recovered during the past week.
The Office for National Statistics said that the productivity in the construction sector must grow by 1.9% in June to avoid pressure on economic growth during Q2, but according to the private sector’s survey, this assumption seems improbable.
The British economic growth has slowed down by 0.4% during the Q1 2016 compared to the previous three months, and surveys showed that consumers’ expenditure and services sector were the two main motives of growth.
Market Institution said that in June, the construction sector has registered its worst deflation over the past seven years along with increasing concerns related to Brexit.