London is going through a pivotal time in its history at the moment. It is dealing with the twin paradigm shifts of Brexit and Coronavirus simultaneously. At a time of so much uncertainty, it’s very difficult to predict which way the market will go. Read on for some hints and trends to follow.
As it stands, London is still an international city and the financial hub of Europe. In the third quarter of 2019, the most vacant region of London was the Docklands at around 10%. Every other London region had < 10% vacancy rate, with the lowest being 2% in Southbank.
London is an expensive and densely populated city. This is unlikely to change into 2020 and beyond. Property is valuable and highly coveted by wealthy individuals from countries such as China and Russia. Brexit holds little direct significance to non-EU property owners, though economic uncertainty could make it a less attractive option to foreign buyers.
A look ahead
It’s hard to imagine what London will look like with Brexit and Coronavirus behind it, but that’s because so much of it has still yet to be decided. However, Britain has committed to ending the transitional period with the EU by 2021. This means that London will no longer be in the Eurozone and freedom of movement may not be preserved.
This will likely have an adverse effect on any European companies with satellite offices in London. If the freedom of movement is restricted, staff may or may not want to remain (or may not be allowed). Companies should consider how many staff in their workforce are not permanently living in London.
Domestic and international concerns
It’s unlikely that the UK and the EU will enjoy the same smooth access to the single market after Brexit, so friction should be expected for EU businesses. This could include additional tariffs on business activities and the need for documentation/licensing for staff.
Regardless of where your business is based, the Coronavirus will likely have a large impact on the rental market, shutting many small businesses that rent a property and will likely widen London’s normally scarce office rental property market.