BERLIN RIVER Building Photos 016

‚Brexit‘ and Berlin Real Estate

 

The chances of ‘Grexit’ – Greece’s exit from the euro zone – have dissipated while the fears of a ‘Brexit’ – Britain’s exit from the European Union – have not [yet] and Berlin property investors are asking what effect this may have on them.

Growing anxiety over the UK’s so-called ‘Brexit’ have already driven the UK pound down to 7yr lows, while institutional property investors want to protect themselves against the volatility ahead of the June referendum.

Even the IMF chief Christine Lagarde, has warned that Britain would suffer if the UK quits the EU saying that present and future uncertainty will hurt economic growth precisely when the world economy is already very tenuous and vulnerable. It is a further risk that UK property investors do not want to have to contend with and many are already speaking with their feet.

This is clearly discernable in the downward trend on inward investments in the UK during the first quarter of this year. Germany and other continental European countries have seen increased volumes for the same period.

A ‚Brexit‘ would almost immediately translate into a wave of interest in commercial real-estate in the banking centers of Paris and Frankfurt as London’s banking role would diminish and alternatives are sought. Berlin’s commercial real-estate market, the German capital, would also stand to gain as international firms seek alternatives to London to house their European headquarters.

The referendum is on June 23rd and while this fear of a ‘Brexit’ may on the one hand favor those leaving UK property investments and changing them to Germany, ironically a Brexit would also affect -negatively- German institutional investors in the  United Kingdom/London real estate market – estimated to be more than €8 billion.

However while the ‚Brexit‘ fear is very real, the chances of the an actual ‚Brexit‘ seem to be somewhere in the neighborhood of 31% who want to leave vs 69%  in favour of those who want to stay in the EU. This according to the UK  online-betting firm Ladbrokes.

We have written before on this blog about why it makes a lot of sense to invest in Berlin real-estate in 2016.