Speaking on the opening panel of law firm DLA Piper’s 2016 European Real Estate Summit, Richard Bentley – head of UK real estate finance at Helaba – predicted a slowdown but then possible bounce-back in the UK market this year as a result of the referendum on European Union (EU) membership.
“At the least, there will be a big pause in the market, and we would expect a slowdown,” he said. “However, if the UK votes to stay in the EU, there will probably be a bounce and it could be a busy summer and autumn.”
He also added that he had expected a slowdown at the beginning of last year, but the reality was a strong 12 months that defied early predictions.
In its home market of Germany, Bentley said, things “felt good and should continue” that way with a high level of investment, increasing rental growth and a higher level of retail spending.
But, he added, “you have to overlay the cycle onto that” and predicted that “a correction will come” as a result of “a stack of known unknowns”.
Bentley also noted that the banks were suffering declining profitability and that higher funding costs “will be passed onto borrowers eventually”.
Bentley was speaking as part of the opening session, entitled “The challenges of risk allocation in a diverse market”. He was one of three (out of five) panellists to forecast a flat year for the European real estate market in 2016 while two panellists expected a slowdown.