Brexit and the Value of European Real Estate Companies
By Gianluca Marcato, Henley Business School and Ralph de Bruijne, University of Amsterdam
We investigate the impact of the Brexit Referendum on the value of publicly listed real estate investment companies in the European Union (EU). Using an event study on key dates over the Brexit process, we find that the price of UK companies experiences a 10% drop since the referendum outcome became known. Within the ex-UK sample, we capture a different impact in countries more or less likely to be relocation destinations for companies currently based in the UK. While EU non-relocating countries do not show any impact, EU relocating countries report significant cumulative abnormal returns growing over time, with 25% net gain one year after the referendum date was set. Finally, consistent with our theoretical prediction, we show that international investment exposure and shareholders’ country of origin play a significant and asymmetric role in UK and EU (particularly relocating) markets.
Further research to come on the topic from the authors. What's your experience been with Brexit and the impact on real estate?
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