Investment demand for British commercial property dropped by the largest amount on record after last month’s vote to leave the European, according to a survey from the Royal Institution of Chartered Surveyors (RICS) on Thursday.
Its investment enquiries balance fell in the second quarter to -16 from +25. The drop was led by London, where investment demand fell to its lowest level since 2009.
The survey will be of interest to Bank of England policymakers. Earlier this month, Governor Mark Carney warned the financial risks of Brexit were materialising after valuations in the commercial property sector fell sharply, prompting some investment funds to freeze their funds.
RICS said more than a third of surveyors – the largest share of respondents – now feel the commercial property market is in the early stages of a downturn.
“Political and economic uncertainty in the aftermath of the referendum result has clearly dampened sentiment in the commercial property market, with the tone becoming visibly more cautious right across the UK,” RICS senior economist Jeff Matsu said.
“Whether or not the sharp deterioration in the RICS survey data is a kneejerk reaction that will unwind as the result is digested, or the start of a more prolonged downturn, remains to be seen.”