June 24, 2016
In an unexpected move, United Kingdom (UK) voters opted to leave European Union, resulting in Prime Minister David Cameron’s resignation. With a 72.2% turnout, the “Leave” camp received 51.9% of the votes, while “Remain” ended up with 48.1%.
The response stunned world markets. London’s FTSE 100 traded as much as 8% lower, while the French CAC dropped by more than 8%, and the German DAX was down by 7%.
In the U.S. the Dow Jones Industrial Average fell 500 points upon opening (a 2.7% drop), while the S&P 500 declined by 2.5%. The NASDAQ Composite dropped 3.6%
Experts are predicting a flight to safer assets. In a recent Forbes.com article, KC Sanjay, senior real estate economist with Axiometrics, noted the vote could decrease British real estate value in the short term, with investors looking to the U.S. apartment market for more stable yield. Sanjay also said that investors from other nations could “shift from investing from Britain to the U.S.”
But Simon Prichard, senior partner with London-based Gerald Eve LLP has a different take on the real estate situation. “I believe London remains a safe haven for international capital,” he told Connect Media. “It may even benefit from a weak pound, counterbalancing any material drop in values in the short term.”
UPDATE: The Dow Jones closed down 600 points on Friday, with financials posting their worst lost since 2011.