British Land says Brexit jitters weakening demand for office space as firms delay investment

Property developer British Land said the impending referendum on Britain's membership of the European Union is dampening demand for commercial property as firms wait for the outcome of the historic 23 June vote.

British Land, which focuses primarily on commercial property and has assets worth (£9.6bn $13.7bn, €12.1bn), much of which is in London, reported a 16% rise in underlying profits over the 2015-16 year to £363m. Despite the referendum uncertainty, a slowdown in the domestic economy, and global economic concerns, British Land said demand for property was still robust, underpinned by low interest rates.

"The occupational market overall remains favourable although more recently there is evidence that some large occupiers are delaying decisions to take space until after the upcoming EU referendum," stated the developer's full-year results.

"In retail, demand remains for prime assets, but wider uncertainty has impacted investment market volumes in recent months. The retail occupational market strengthened overall, reflecting improving consumer confidence and rising real wages. However, since the turn of the year, there have been some signs that consumer confidence and spending have started to weaken.

Chris Grigg, chief executive of British Land, told analysts that the scale of the potential impact of a so-called "Brexit" from the EU is hard to judge. "We don't believe an exit would be positive for London or the broader UK economy," he said.