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This thesis takes the form of a market research report with the goal of analyzing the implications of the United Kingdom (UK) leaving the European Union (EU) (known as “Brexit”) on London’s office commercial real estate market. The ultimate goal of this report is to make a prediction, firmly grounded

This thesis takes the form of a market research report with the goal of analyzing the implications of the United Kingdom (UK) leaving the European Union (EU) (known as “Brexit”) on London’s office commercial real estate market. The ultimate goal of this report is to make a prediction, firmly grounded in quantitative and qualitative research conducted over the past several months, as to the direction of London’s commercial real estate market going forward (post-Brexit). Within the commercial real estate sector, this paper narrows its focus to the office segment of the London market.

Understanding the political landscape is crucial to formulating a reasonable prediction as to the future of the London market. Aside from research reports and articles, our main insights into the political direction of Brexit come from our recordings from meetings in March of 2017 with two high-ranking members of Parliament and one member of the House of Lords—all of whom are members of the Tory Party (the meetings being held under the condition of anonymity). The below analysis will be followed by a discussion of the economics of Brexit, primarily focusing on the economic risks and uncertainties which have emerged after the vote, and which currently exist today. Such risks include the UK losing its financial passporting rights, weakening GDP and currency value, the potential for a reduction in foreign direct investment (FDI), and the potential loss of the service sector in the city of London due to not being able to access the European Single Market.

The report will shift focus to analyzing three competing viewpoints of the direction of the London market based on recordings from interviews of stakeholders in the London real estate market. One being an executive of one of the largest REITs in the UK, another being the Global Head of Real Estate at a top asset management firm, and another being a director at a large property consulting firm. The report includes these differing “sub-theses” in order to try to make sense of the vast market uncertainties post-Brexit as well as to contrast their viewpoints with where the market is currently and with the report’s investment recommendation.

The remainder of the report will consist of the methods used for analyzing market trends including how the data was modeled in order to make the investment recommendation. The report will analyze real estate and market metrics pre-Brexit, immediately after the vote, post-Brexit, and will conclude with future projections encapsulating the investment recommendation.
ContributorsHorn, Jonathan (Co-author) / Sidi, Adam (Co-author) / Bonadurer, Werner (Thesis director) / McDaniel, Cara (Committee member) / Department of Finance (Contributor) / School of Politics and Global Studies (Contributor) / Economics Program in CLAS (Contributor) / Barrett, The Honors College (Contributor)
Created2017-12
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Description
Over the course of the next two years, the United Kingdom and the European Union will be participating in Brexit negotiations over the United Kingdom's withdrawal from the European Union. This paper discusses in-depth the expected economic effects of Brexit. To satisfy the desires of those who voted to leave

Over the course of the next two years, the United Kingdom and the European Union will be participating in Brexit negotiations over the United Kingdom's withdrawal from the European Union. This paper discusses in-depth the expected economic effects of Brexit. To satisfy the desires of those who voted to leave the European Union, the United Kingdom will leave the European Single Market, creating barriers to trade. In exchange, the long-term effects for the United Kingdom and the European Union are expected to be negative. Despite this, it appears that negative effects on British direct foreign investment have been overstated and the European Union may be able to benefit from a well-handled relocation of financial services inside the European Union. The paper also makes a few suggestions regarding Brexit negotiations, advising the United Kingdom to make concessions to European Union in areas such as contributions to the European Union budget for increased goodwill and greater access to European markets.
ContributorsBennett, Luke Andrew (Author) / Hill, John K. (Thesis director) / Mendez, Jose (Committee member) / W. P. Carey School of Business (Contributor) / Economics Program in CLAS (Contributor) / School of Mathematical and Statistical Sciences (Contributor) / Barrett, The Honors College (Contributor)
Created2017-05