Real estate investment likely to surge as Brexit drama recedes

Boris Johnson’s landslide win on Thursday triggered the pound to
hit a 12-month high, within the first 20 minutes of the Prime Minister’s
victory.

Financial markets are responding to the pro-business Conservative Party
victory and the coming to an of the dramatisation of Brexit. Analysts and savvy
investors predicted a surged market after the election, and true to that, the
real estate sector is beginning to recede.

The property
market had been marred with uncertainty even as both local and international
investors’ money kept pent up due to Brexit.

But in the
long term, there could be choppy waters ahead. According to market experts,
there could a slowdown as Brexit plans become more explicit.

Now that
Boris Johnson secured his win, Brexit is likely to sail through. And the result
to the UK real estate could be a timely relief.

Market
leaders believe the win by the Conservancy party is bound to revive UK’s real estate sector following a year of slowed market activities. Nonetheless,
investors are worried that if resolving the relationship between the UK and
Europe gets complicated, the surge that is starting to be felt could soon die
down, hurting the UK’s economy.

The
concluded elections have brought to an end the protect-and-survive attitude
that investors had adopted to cope with market uncertainties.

Richard
Divall, Colliers International’s Head of Cross Border Capital Markets, said
that: “2019 has been an awful year for international investment in UK real
estate. Anyone who needed investment committee approval wouldn’t have got it.”.

In a report
by Real Capital Analysts, the firm indicated that in the first quarter of this
year, UK’s investment volumes dropped 50% compared to last year.

But even
with that, the UK real estate market is and was always investment-ready.

Just a few
days to the elections, Divall said: “Plenty of investors will be overweight in the eurozone,
and the UK looks cheap today.” He said that while referring to German bank Deka
Immobilien’s acquisition of 1M SF B&M Bedfordshire warehouse.

“A lot of
money will return to the UK. Not all of it, of course, but after a year of low
volumes, it will come back in sectors like student housing and residential. And
for all those investors chasing yield and return, Europe looks expensive. A lot
of money will head to North America, but, if you have a choice between a 4%
yield in Warsaw or 3% in Germany or 4.5/5% in London, they want to buy into
London because it’s the more liquid market, especially if the predicted global
economic slowdown comes to pass,” Divall added.