The UK's decision to leave the European Union (EU) has had a detrimental impact across the commercial property market, according to the Royal Institute of Chartered Surveyors (RICS).

In its Q2 2016 UK Commercial Property Market Survey, the organisation said Brexit had resulted in a "significant drop" in confidence and investor demand in the market.

The largest share of survey respondents (36%) felt the market is now in the early stages of a downturn, while investment inquiries fell across the country deteriorating from +25% in Q1 to -16% in Q2.


Foreign investor demand also declined with 27% of participants seeing a drop in interest.

In London, 41% more respondents saw a drop in demand for commercial real estate, the lowest reading since 2009.

Jeff Matsu, RICS Senior Economist, said: "Political and economic uncertainty in the aftermath of the referendum result has clearly dampened sentiment in the commercial property market, with the tone becoming visibly more cautious right across the UK. Although the impact is widespread, the drop in confidence has been most pronounced in London.

"Nevertheless, following several years of strong capital value and rental gains, momentum had already appeared to be slowing. Whether or not the sharp deterioration in the RICS survey data is a kneejerk reaction that will unwind as the result is digested, or the start of a more prolonged downturn, remains to be seen."

(LM/CD)