Office values in the City of London financial district fell the most in at least seven years after Britain voted to leave the European Union.
Prices fell 6.1 percent in July on heightened economic uncertainty, especially for financial services firms, CBRE Group Inc. said by e-mail on Monday. That’s the largest decline since the broker began compiling the data in July 2009.
Investors are nervous that vacancy rates will rise and rents fall if companies delay expansion or move some workers overseas after the Brexit vote. The district also faces an oversupply of space after developers started projects before the referendum, Thomas Wels, global head of real estate at UBS Group AG’s asset-management unit, said in an interview. More than 1,900 firms are likely to review their office-space requirements following the Brexit vote, real estate researcher DealX said in July.
“Capital-value growth was always expected to falter at some point during 2016, as global economic uncertainty cast doubt on the likelihood of the strong growth seen in previous years persisting for much longer,” said Miles Gibson, head of U.K. research at CBRE. “The Brexit vote has now crystallized that expectation, though it is not the only driver of it.”
Central-London capital values fell 4.1 percent last month and U.K. commercial-property values dropped 3.3 percent, CBRE said.