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QuickTake Q&A: Investors Flee U.K. Real Estate Funds Post-Brexit

Bloomberg business news

A U.K. Commercial Property Crisis?

Updated on

Major investment fund managers have suspended trading in U.K. real estate funds in the latest market fallout from Britain’s vote to leave the European Union. Industry watchers are warning that London office values could fall by as much as 20 percent within three years of the country’s split from the EU. The Investment Association says U.K. real estate funds hold about 24.5 billion pounds ($31.6 billion).

Even before the Brexit vote, there were fears that U.K. commercial properties were overvalued, with foreign flows of capital down 50 percent in the first quarter. Overall investing in the U.K. is now seen as riskier, and London office rents may take an additional hit as international businesses look elsewhere following Britain’s retreat from Europe.