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Brexit — speaking with one voice

by Richard Fleming

“Brexit means Brexit.” The trouble is that Brexit means different things to different people and anyway we won’t really know what Brexit means until the Article 50 negotiations have been concluded — and probably not even then. Not for a while after, or a while longer.

Article 50 was triggered, finally, by UK prime minister Theresa May on 29 March and Donald Tusk, president of the European Council, responded on 31 March with a set of draft negotiation guidelines that was sent to the other 27 European Union member states for consultation.

The UK/EU divorce process is underway but little real progress is expected before the fall, after the French and German elections. All the talk and rhetoric at this stage about soft Brexit, hard Brexit, half-in/half-out Brexit, no Brexit, punish Brexit and walk-away Brexit is just posturing and jostling, and both sides are playing the game. Gibraltar? That’s between a rock and a hard place.

The European real estate industry is no exception in wanting to know more about what Brexit might mean, for the actual real estate and for the people owning and investing in that real estate. On 4 April, ahead of its annual conference in Berlin, INREV, together with 16 international and national real estate associations, published a set of guiding principles for future EU/UK relations that they hope will allow the industry and their members to understand more about the implications of Brexit and to help formulate a position, if not a response.

It is not easy to condense a set of guiding principles into a news report; you may be better served to go to https://www.inrev.org/library/publications/4950-guiding-principles-for-future-eu-uk-relations-the-non-listed-real-estate-investment-perspective and read the detail from there.

“We are committed to ensuring that the hundreds of billions of euros that institutional investors from around the globe have invested into the European economy through real estate are not put at risk,” the document states.

“A broad range of organisations and businesses active in the European real estate market have an interest in minimising the disruption of the UK decision, wherever they are located,” the preamble continues. “They include long-term investors such as pension funds and insurance companies that provide capital, fund managers that invest that capital, bank and non-bank lenders that provide finance, professional service providers and ultimately all European businesses that rely on an effective real estate sector to provide the space they need to operate and grow.”

Jeff Rupp, director of public affairs at INREV, points out that great efforts were made to come up with guidelines that could find wide acceptance across the industry. Ultimately, a large number of national and pan-European real estate associations supported the guidelines (see the panel of association logos above). The list includes UK associations like the BPF and AREF that might have been expected to take a different view. “They were all quite happy to join together on this, and we are equally happy that they showed industry solidarity by putting their names to it,” says Rupp.

It is not often that Europe can speak with one voice on an issue, and INREV may just have provided the leadership to crack it.

The INREV conference included discussion of Brexit but it is still too early to draw meaningful conclusions. Negotiating positions are being set out. We will know more by this time next year, when negotiation positions may have turned into an outline agreement. Or not.

One interesting snippet to come out from this year’s conference. You know that low interest rate, low inflation, low return environment that we have in Europe, and that is blighting markets and investor sentiment? It looks like it could be with us for a while yet. Ten, 15 years was mentioned. That’s not short or even medium term. That’s long term. Lower for longer, sure, but were we expecting that?

Next year’s INREV annual conference, by the way, will be held from 10 to 12 April 2018 in Dublin.

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