By Tatiana Swedek
With the British vote to leave or remain in the European Union only one day away, real estate markets both domestic and abroad stand with much at stake. Over the past few months, polls have shown the “Remain” camp in the lead, with the “Exiters” gaining heat, and the decision becoming neck and neck. However, there has been a significant resurgence in the “Remain” opinion within the last few days, appearing to potentially seal the fate of the British referendum.
The possibility of the British exit from the EU, or “Brexit,” as it is affectionately called, represents a potentially large disruption to economic markets globally. Academic economists and governmental financial personnel have varying views on the topic. Many believe that an exit will result in prices of British real estate to drop, inviting US commercial real estate managers to pounce. On the other hand, foreign wealth, particularly from Russia and the Middle East, find solace in acquiring London real estate. Much of this traffic could be anticipated to divert to New York City, as the US market represents a far more stable alternative.
The prediction of foreign wealth flowing into New York following a Brexit is not guaranteed. With a British exit would come new financial policies, potentially inhibiting investment into US CRE. Contrarily, more certain would be the short-term destabilization of Europe, leading investors to pursue the relative security of American treasuries, thus decreasing interest rates.
Bankers and governments the world over are preparing for a UK recession if the referendum passes, as the UK’s relationship with the rest of Europe could be altered for decades. The likelihood of a British exit is currently decreasing, but the world will find out soon enough, as referendum results are expected as early as Friday morning, June 24th.