Some commercial property buyers are invoking “Brexit clauses” written into contracts agreed before Britain voted to leave the EU, allowing them walk away from the deals.
In other cases buyers have yet to exercise such get-out clauses but are keeping the option open to try to renegotiate the price down, according to property lawyers and managers.
A third group is playing for time in the hope the effect of the June 23 referendum result on values becomes clearer, they say.
British commercial real estate - from office blocks to shopping centres - has been particularly hard hit by uncertainty surrounding Brexit.
Transactions fell sharply before the referendum and a number of property funds have been suspended since then as retail investors try to bail out.
Some buyers demanded contract provisions before the referendum allowing them to pull out if the decision was to leave the EU.
It was unclear how widespread they were, but some are now being exercised following the result, although the overall number is unknown.
“Brexit clauses have been invoked across the industry including some by our clients,” Paul Firth, head of real estate at law firm Irwin Mitchell told Reuters. “We have had at least three,” he said.
Before the vote, Mr Firth said a significant percentage of the firm’s “bigger investment deals” with values ranging from £10m (€11.7m) to £80m either included Brexit clauses, or purchasers had sought to negotiate that they be included.
The economic effect of Brexit is beginning to be felt. British consumer confidence suffered one of its biggest drops in 21 years, a survey showed, clouding the prospects for retail property.
Doubts also surround the ability of the British financial services industry, which employs more than two million people, to continue serving clients on the continent.
Under an EU “passport” system, banks, asset managers and clearing houses have access to the single market only if the country where they are based complies with the bloc’s regulations.
This may mean moving jobs from Britain to countries that remain in the EU, heightening uncertainty over demand for office space particularly in London.
Shares in British-listed companies that invest in commercial property, which own large amounts of office space in the capital, have already fallen sharply.
“It is likely the uncertainty created by the EU referendum result will have a negative impact on economic growth in London,” Toby Courtauld, chief executive of Great Portland Estates said.
“As a result, we can expect London’s commercial property markets to weaken during this period of uncertainty,” he said.
The Bank of England also said commercial real estate transactions by overseas investors had fallen by 48% in the first quarter.
Investors in retail property funds are trying to get out in such numbers that a number have now suspended redemptions, freezing more than £18bn.
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