Brexit is a reality! It has been the topic that has kept investors in suspense for a long time, but not everyone. The most daring over the previous six months, taking advantage of the wave of uncertainty, have found some excellent property investment opportunities, especially in the city of London.

As of last Friday, the United Kingdom is no longer part of the European Union and negotiations have been going on for a few days. How will the real estate market change? What will be the consequences of Brexit? To answer these questions, we must first look at the facts that have happened in order to predict a trend, what in statistics is called the equalised trend.

-Facts :

The flight from the financial centre of the world’s major players did not happen, nor did the collapse of the pound against the other major world currencies. Unemployment in the UK stands at 3.8% and specifically the city of London is at its lowest level in a decade .

A number of European investment funds in the previous two months finalised the acquisition of major assets in central London and growth in terms of UK Gross Domestic Product in 2019 was 1.3%, exceeding forecasts of 1.2%.

For many institutional investors, leaving the European Union is seen as an opportunity, stemming from government measures that the Prime Minister has stated he will take.

These include:

(a) the decrease of corporate tax to 17 %;

b) raising the minimum wage (already a law in force); c) deregulation of the parameters imposed by the European Union in financial matters.

With the start of the negotiations, Boris Johnson declared that the only agreement that will be signed between the two blocs will be the one concerning trade based on free trade; the same type of agreements that the EU has signed with countries such as Canada and Australia

Will this be possible? Will the European Union grant such an agreement? The answers to these questions we will only have at the end of the negotiations, but an important clue can be provided by the UK’s trade balance figures:

a) Trade between the EU and the UK accounts for 38 % of the UK trade balance;

b) The EU country with which the UK trades most is Germany with a transacted value in 2019 of £70 billion in terms of goods imported from the UK itself;

c) 35 % of ‘just in time’ industrial production for major Franco-German brands takes place in the UK.

-Conclusions:

From these confirmed macro-economic data, it can be deduced that a no-free trade agreement, i.e. Brexit no-deal, would damage the two strongest countries in Europe (UK and Germany) with negative repercussions on the economies of both .

A most likely free trade agreement will allow the respective blocs to continue their functionality on the markets in terms of foreign trade, but at the same time it will allow the UK to implement policies to attract investment from global players, no longer violating regulations that are prohibited within the EU, as the same prohibitions are included in the treaties between the countries themselves. All information on the negotiations can be found at: http://www.gov.uk/transition.

As far as the trend in the London property market is concerned, the relevant data was set out in the previous article and the trend for the year 2020 is positive. We will discuss the trend of the London real estate market, with regard to the first quarter of 2020, at the end of the quarter when the data will be made official.