Theresa May triggers Article 50 – Property Market Reacts!!

The letter giving official notice was delivered to European Council president Donald Tusk in Brussels by the British ambassador to the EU, Sir Tim Barrow.

The move effectively sets the clock running on the negotiations, which will now need to be concluded by March 2019 – although some say it could take even longer.

In a statement in the House of Commons, May will tell MPs that the triggering of Article 50 marks “the moment for the country to come together”.

The property industry has stressed that collaboration between business and government will be crucial if the UK is to achieve the best possible deal.

Although the triggering itself is largely a symbolic moment, it represents the start of Britain’s long journey toward its exit from the European Union – a road on which the industry says there could be plenty of economic twists and turns.

Here is a round-up of reaction from the sector.

Colin Wilson, head of UK & Ireland, Cushman & Wakefield: “While it is an important moment, it is an expected and largely symbolic act compared to firstly, the date two years from now when the 24-month window for negotiations concludes, and secondly, the many twists and turns that we can expect along the way. It is of more interest to me what that road map looks like.”

“At this stage nothing is certain. As a result, caution is likely to remain a prevalent theme among investors and occupiers. That said, there remain many positive indicators of global and UK economic activity which are positively impacting UK real estate. In many respects we are seeing a bias towards ‘business as usual’, despite the Brexit backdrop which is encouraging.”

Howard Crocker, managing director, Delph Property Group: “On the one hand this is a historic day, on the other it’s business as usual for Britain. The truth is, no-one can accurately predict what the post-Brexit landscape will look like, although triggering Article 50 will invariably lead to a period of uncertainty. The supply of labour to the construction industry is possibly one of the most immediate challenges, with reports emerging of skilled foreign workers departing the UK.”

Jonathan Goldstein, chief executive of Cain Hoy Enterprises: “The country is now setting out on what will be a long journey, with a one-way ticket. While the government negotiates, there is likely to be some stagnation in economic activity over the next two years until we understand what our new relationship with the EU will be. The pathway to Brexit remains unclear and I expect to see instability over the next two years as the twists and turns cause anxiety and uncertainty in the markets.”

Jeremy Blackburn, head of UK policy at RICS: “The triggering of Article 50 has today set Britain on a course to exit the European Union. It is essential now that government and industry work together to get the best deal possible and ensure our country’s future growth and prosperity — it is everyone’s responsibility to make Brexit work.

Mark Farmer, chief executive of Cast consultancy: “While Theresa May has said the government won’t provide a running commentary on Brexit negotiations, the currency markets will and we’re likely to enter another period of currency volatility as the pound zig-zags with every tidbit of information traders can get hold of. Not only will this wreak havoc with contractors’ supply chains and costs, it will likely to deter EU workers that many in the industry, particularly in London, have come to rely on, with the value of their remittances going up and down unexpectedly.

Patrick Flaherty, chief executive – UK & Ireland at AECOM: “Now that Article 50 has been triggered, industry still faces a minimum of two years of continued uncertainty, particularly around issues such as labour availability and construction material costs. Focus must remain on progressing the UK’s ambitious infrastructure pipeline to give confidence to the market in the intervening period.”

Sandra Dowling, UK real estate leader at PwC: “The triggering of Article 50 will prompt companies across all industries to think about how Brexit will impact the property they hold or occupy. The real estate industry should use Brexit, alongside wider global political and social changes, as a catalyst for much needed innovation in the UK property market. Companies should ensure they view the coming months of negotiations holistically and include Brexit plans in their wider business strategies.”

Jean-Marc Vandevivere, chief executive of private rented sector developer PLATFORM_: “Regardless of the final deal agreed with the EU, the fundamentals that have made build to rent an attractive proposition are likely to remain the same, namely a mismatch between supply and demand, with the number of renters predicted to continue rising and there being a lack of quality, purpose-built stock in key locations. Investors might hesitate to act initially owing to the uncertainty during the negotiation period, but as an income-producing, a-cylical asset, build to rent provides a perfect opportunity for diversification.”