No, but we do expect UK commercial property prices to re-rate to a lower level as investors grapple with the consequences of the Brexit vote. Driven by reductions in tenant demand prospects, particularly in the London office submarket, prices will need to reflect dampened rental growth expectations. But with fundamentals generally healthy, the British pound weak, and demand for income-producing assets high, UK commercial property prices may be more resilient than many investors anticipate.

Leading up to the June 23 Brexit vote, the fear of losing passport privileges led many businesses to put a hold on signing new commercial lease agreements. In the central London office submarket, an area highly exposed to the vote, take-up activity in the second quarter fell 22% relative to the first, and 23% relative to the ten-year average, according to CBRE. Given the substantial economic and political uncertainty connected to the United Kingdom’s exit, these dismal numbers look set to worsen.

Public markets reacted quickly. A prominent UK real estate investment trust index dropped 13% in the final days of June (post-Brexit), leading to its worst monthly result since August 2011. And several UK open-ended property funds, which must sell properties if redemption requests exceed cash reserves, imposed haircuts and halted trading after too many investors sought to exit. These events, coupled with the sharp downward revisions to many research houses’ UK GDP growth forecasts, raised concerns about a severe downturn in the commercial property sector.

To be sure, much depends on the United Kingdom’s looming divorce proceedings, but we see several factors that are likely to limit the severity of the re-pricing. Like leasing activity, construction activity is also likely to fall. For at least the short term, we’ve already seen evidence suggesting this is the case—the most recent Savills UK Commercial Development Activity Report, which reviews leading developers’ and contractors’ three-month outlooks, suggests many believe conditions are deteriorating. With the supply of property already tight, low construction levels would provide support to prices.

Despite Brexit, we also expect the United Kingdom to remain a leading destination for international capital in the long term. The United Kingdom and, most importantly, London, is among the most transparent and mature markets globally. While the RICS UK Commercial Property Market Survey indicates foreign investor enquiries declined at a fast pace in the second quarter, the significant drop in the British pound post-Brexit, and its potential for further declines, will prompt many investors to re-examine investment decisions. Anecdotally, we are aware of multiple institutional property fund managers who now see opportunities in the UK market.

Market conditions also appear to be stabilizing, if temporarily. Of the open-ended real estate funds that halted trading, at least one has reopened and another has moderated its fair value adjustment. Although the gating of money no doubt spooked investors, it was evidence of improved governance relative to the global financial crisis. The turmoil in this retail-heavy space also did not occur to the same extent on the institutional side. And, while UK REITs did lose significant ground in the immediate days following the vote, the asset class is up around 4% so far in July.

In an environment where sovereign bonds continue to hit new lows and global negative-yielding debt continues to pile up, investors would benefit from ensuring that their liquidity is adequate and heeding our advice to be slightly more defensive than neutral when looking across the portfolio. Ultimately, while we expect yield-hungry investors to continue to see value in the UK commercial property sector, protecting prices from a significant collapse, investors looking for opportunities may benefit from patience.

Kevin Rosenbaum is an Investment Director and Indeesh Tangeraas is a Senior Investment Director on Cambridge Associates’ Global Investment Research team.

For more on the likelihood of further declines in the pound, please see Aaron Costello’s July 20 Research Brief, “Has the GBP Bottomed? Not Likely.”