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How Brexit may affect commercial real estate markets

The Maryland commercial real estate market might be affected by the June decision of the United Kingdom to leave the European Union, but analysts say it is too soon to say for certain what will happen. In the U.K., the market is likely to remain uncertain for some time. London has been popular with investors from the Middle East, but they might shift their focus to the United States if it looks as though the U.K. will be less profitable.

The U.S. is already popular with foreign investors. They contributed $16.3 billion to the multifamily sector in 2015. One observer says the decision to leave will have a much greater influence in the U.K. and Europe than in the U.S.

However, another believes that since the largest amount of foreign investment comes from the U.K., there could be a change, and capital markets in particular may be affected. Regarding interest rates, the Federal Reserve is likely to take a wait-and-see attitude to see how global financial markets are affected by Brexit. One agency predicts more volatility in mortgage rates.

New investors might be drawn to the commercial real estate market as a result of these changes. A person's degree of involvement in commercial real estate investment may range from being one of a number of investors to buying a property and renting to tenants. Both novice and experienced investors may want to work with an attorney throughout the process of purchasing, owning and managing property. In addition to issues raised in the purchasing process itself, areas in which attorneys might be able to advise range from contract disputes to zoning issues to dealing with environmental cleanup.

Source: National Real Estate Investor, "Brexit Could Bring More CRE Investors to U.S. Shores," Diana Bell, June 24, 2016

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