The value of City of London offices tumbled by 6.1 percent in July, following Britain's vote to leave the European Union, according to the monthly index for the world's largest real estate investment manager, CBRE.
Across the U.K. there was an overall fall of 3.3 percent for commercial property.
The pullback in the City of London's office market highlights the extent to which the fortunes of this small pocket – known as the "Square Mile" – are tied to prospects for financial services firms. In the wake of concerns about the financial sector being forced to shrink its U.K.operations as the country prepares for Brexit, the slowdown was not a surprise.
Miles Gibson, Head of U.K. Research at CBRE told CNBC via email "Although U.K. commercial property capital values fell by 3.3 percent overall, the national office and retail sectors experienced slightly larger falls at 4.1 percent and 3.6 percent respectively. A pause in capital value growth was widely expected in 2016, with the referendum partly acting as a 'lightning rod' for the effects of wider global economic uncertainty."
This data contribute to a rough period for industry investors after several open-ended funds were gated following an investor stampede for the exit which saw £1.4 billion pounds ($1.8 billion) withdrawn from U.K. property funds during June, according to data from the Investment Association.
While Aberdeen Asset Management has since removed its suspension and Henderson Global Investors last week announced a lowering of its fund's liquidity premium from 5 percent to 3.5 percent, it is expected it could take much longer for managers to gather sufficient liquidity to re-open funds and return to business as usual. Analysts at investment bank Jefferies have estimated it could take up to six months in the current climate for funds to dispose of their assets earmarked for sale.
Looking beyond offices and gazing further afield than London, however, parts of the picture look a little brighter.
In June 2016, U.K. online retail sales showed annual growth of 14.1 percent, dwarfing the 4.3 percent growth rate notched up for national retail overall. The spiraling success of online shopping platforms has consequently driven demand for warehousing facilities.
CBRE's Gibson highlighted the opportunity presented by this trend, saying: "Rental values actually went up in July for industrial property, which reflects the significant mismatch between supply and demand in that market as e-commerce retailers snap up space to support their customer fufilment strategies."
He also identified another instance of demand outweighing supply in the leisure property market, saying: "Rental values in non-traditional investment sectors such as hotels and leisure were also robust in July."