The UK commercial property market is at the early stages of a downturn according to chartered surveyors.
The Royal Institution of Chartered Surveyors commercial market survey found that capital value and rent expectations are falling.
Nearly a third (36%) of chartered surveyors thought the UK market is at the early stages of a downturn, while over half (54%) in London had the same view.
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.”
In the second quarter of 2016 investment enquiries saw the largest drop-off on record, with the fall being most pronounced in London.
Capital values are expected to modestly decline in the next year, with secondary retail and office segments expected to see the most visible decline.
Jeremy Blackburn, RICS UK head of policy, said: “Osborne, Hammond and Carney have moved to reassure markets post Brexit.
“Our commercial market survey shows clearly the impact that uncertainty is having on investment and occupier decisions.
“In laying out what we will negotiate for, there is a need for clarity for the ability of financial services to do business in the UK which will affect demand for office space, especially in the City of London.
“Similarly access to the single market or potential tariff barriers will be key in the longer term for some industrial occupiers and exporters. And immigration plans could well affect the future supply of new commercial space onto the market through construction starts.
“Ministers need to lay out a clear timeline and set of ambitions for negotiating Brexit and our future trade relationships. First Ministers in the devolved nations must play their part in providing reassurance for property markets.”