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Cushman: £4.6bn of UK RE deals completed post-Brexit

The Chicago-based property services firm has compiled data which suggests that almost half of deals in the market on June 23 have completed or are under offer. 

More than a third of UK commercial property deals that were offered to the market prior to the EU referendum, with a transaction value of £4.6 billion ($5.6 billion; €5.2 billion), have now completed, according to Chicago-based property services firm Cushman & Wakefield.

A further 15 percent of transactions, worth roughly £2 billion, are currently under offer from bids received since the referendum.

The proportion of deals not proceeding has reduced, said Cushman & Wakefield, in both London and the regions. A greater share of deals have been completed in London, with 36 percent, than the rest of the UK, with 30 percent. One positive for the regions is that this figure jumps to 55 percent compared to the capital’s 44 percent when under offer deals are included.

Nigel Almond, head of EMEA capital markets research at Cushman & Wakefield, said the next month or so would be key because of the sheer amount of deals that are being worked on at present.

“Four months on from the vote and the majority of deals that were live at the time are still yet to complete, underscoring the fact that transactions are taking longer to progress. The next few weeks will provide a clear market barometer with over £1 billion of assets expected to go to best bids,” said Almond. “More positively, several deals which were pulled in the immediate aftermath of the vote have returned to the market with adjustments to pricing. The past month has also seen plenty of new investments offered to the market,” he added.

Among those deals that have been completed, said Cushman & Wakefield, both private investors and property companies have been active across London, with a broadly equal share of capital from both domestic and overseas sources. The data also showed that 80 percent of overseas investment in the UK has been in London.

Outside London, domestic real estate investment funds have seen an increase in activity which, according to the property services firm, demonstrates that the open-ended fund crisis was limited to a small number of firms.

“Initial concern of a collapse in prices has not materialized. The weighted average fall from offer price to complete price is just 2.8 percent with little variation between London and the rest of the UK. The variation is clearer by lot size,” said Jason Winfield, head of investment agency UK & Ireland, Cushman & Wakefield. “The weighted average discount on lots under £50 million is just 1.7 percent, rising to 3.9 percent on those over £50 million. There is, however, a far narrower spread on pricing for larger lots which indicates a much greater degree of clarity on pricing in this price bracket,” added Winfield.

The data also found clear polarization in the market in the level of transaction progress by lot size. To date, 68 percent of assets under £20 million have completed compared to just 17 percent for assets over £100 million.