The fallout of the vote to leave the European Union is now under the spotlight. As bond yields slide to record lows, housebuilders’ share prices tumble and a number of development projects are reassessed, EG will be analysing what it means for the property industry.
- What are the implications for the Northern Powerhouse, major infrastructure projects such as HS2, and the OJEU process?
- Who is most exposed to EU funding gaps?
- What does it mean for those looking to raise capital.
We will be updating with the answers here in the coming hours, days and weeks.
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OUT NOW: EG London Offices Market Analysis Q2 2016
Office take-up slumped by more than two fifths in the run up to the referendum. Were tenants already shunning the capital? Click here to read the full report for this quarter.
Will a drop in migration solve the housing crisis?
An interesting statistic emerged last month. There are 3m EU migrants living in the UK, and about 1m UK citizens living in the EU.
It does not take a genius to work out that – in an admittedly catastrophic and worst-case scenario – this could mean 2m fewer people in the UK.
With the national housing shortage somewhere between 1m and 2m homes, could that mean an almost immediate solution to the housing crisis?
While no one expects the government to boot out 2m EU citizens, could less immigration ease the pressure on housing? And what effect would it have on house prices?
Click here to find out
Retail funds – what’s going on?
Open-ended UK fund closures have provoked concerns that the property industry could once again be at the heart of the next downturn in the UK economy. Should everyone be running for the hills or are the headlines not as scary as they look?
What’s happened so far?
Last week, most open-ended UK retail real estate funds reduced the pricing of the units in their funds following the result of the EU referendum and some switched to weekly rather than monthly valuations.
This was done to try to prevent redemptions from the funds. However, this measure has not been successful, particularly for six fund managers – Standard Life, Aviva, M&G, Henderson, Threadneedle Columbia and Canada Life which have all closed their funds to redemptions.
The Bank of England has also warned in its latest financial stability report that the closures and prospective sales of assets by the funds are a risk to the UK’s economy.
It said: “Any adjustment in commercial real estate markets could potentially be amplified by the behaviour of leveraged investors and investors in open-ended commercial property funds.
“Although they have a range of measures to manage stressed levels of redemptions, these open-ended funds could be forced to sell illiquid assets to meet redemptions if conditions persist beyond funds’ notice periods.”
Click here to find out why it has happened, if there will be more closures and answers to more questions on the subject.
• What’s next for Brexit?
As the Supreme Court rules against the government in the constitutional case of the century, David Mundy and Oliver Spencer outline the court’s findings and examine what must happen now for the UK to leave the EU
• Supreme Court rejects government’s Brexit appeal
The government has failed to overturn the High Court ruling that Article 50 cannot be triggered without an act of parliament
• Back to parliament: property policy crunch time
• UK sets out to strike new deals
• Brexit hits finance sector demand in Edinburgh
• John Townsend: Brexit chaos won’t slow the auctions market
The weeks following the Brexit vote on 23 June have seen economic and political chaos, unleashing a wave of uncertainty and further unsettling investor confidence.
• Cheap pound ‘could boost sales’ as overseas investors enter the market
Two weeks after the UK voted to leave the European Union, which led to an immediate drop in activity at several major auction houses, some auctioneers are seeing an upside.
• Firms witness EU ‘shock factor’
• Up to 100,000 finance jobs could leave UK
The City of London faces a post-Brexit exodus of international occupiers as they review the Square Mile’s credentials against those of other EU cities.
EG London Question Time: July 2016
Post Brexit – is real estate still an attractive investment?
London’s vote of confidence as grandees reject fears that the City will lose its competitive edge.
Cardiff Question Time: June 2016
Keep calm and carry on
Unexpected though the outcome of the referendum was, the crowd that gathered at Cardiff City Hall on 30 June was urged to be buoyed by the opportunities that Brexit could create, and to focus on inward investment as key to keeping Wales competitive in the global market.
• UK property returns 1.2% ahead of Brexit
UK property returned 1.2% in Q2 2016, according to the MSCI/IPD UK Quarterly Property Index, a marginal rise on the 1.1% recorded in Q1.
• Investors flock to fund redemption sales
Aberdeen Asset Management attracted a swarm of investor interest this week as it put the largest assets in its £2.7bn UK Property Fund up for sale.
• Briefing: passport perils
Denying the UK access to Europe’s financial markets puts office space at risk
• Funds target Brexit distress
Almost £2bn of funds closed this week with a fresh focus on UK property.
Where are we now?
How badly UK property is hit by Brexit will depend on other asset classes’ and other countries’ performance
• Bosses grab shares amid Brexit chaos
Directors across the UK property industry rushed to buy falling shares in their own companies following the Brexit vote.
- Tony Pidgley, founder and chairman of Berkeley Group, bought nearly £800,000 of shares on 24 and 27 June, making more than £24,000 when prices rose again.
- Greg Fitzgerald, chairman of Galliford Try, spent £694,527 on his firm’s shares when their price fell by 34%. The value of those shares had risen by £16,203 by 4 July before falling to £640,373 on 7 July – a loss of 7.8%.
Who else bought the shares? Click here to find out…
• UK investors pull out of property funds
• Osborne: UK economy ‘fundamentally strong’
• UK property values forecast to fall by 5% next year
UK commercial property values could fall by an average of 4.9% next year and by up to 14.5% in the London office market, according to post-referendum forecasts from Real Estate Strategies.
Is this the next credit crunch?
The UK real estate market faces the prospect of another credit crunch as lenders come to terms with an impending Brexit.
• BoE warns of risks to UK financial stability
The Bank of England says the prospect of open-ended funds being forced to sell assets is a risk to the UK’s financial stability.
• Aviva is second property fund to suspend trading in wake of Brexit
Aviva Investors has suspended dealing on its £1.8bn property fund, becoming the second asset manager to take action in the wake of the Brexit vote.
• Brexit result panic prompts 40% share plunge
Housebuilder shares have been some of the securities hardest hit since last Thursday’s vote to leave the European Union.
• Listed propcos’ share prices crumble on Brexit
UK listed property companies suffered huge losses following the Brexit vote and have since only made partial recoveries.
• Benson Elliot eyes UK for new fund
Fund manager Benson Elliot is preparing for a push on UK investments following the EU referendum.
• ‘Never-endum’ groundhog day for EU-friendly Scotland
Investment volumes in Scotland could plummet again as a result of the turmoil around Brexit and the prospect of another independence referendum.
• German and French funds target dublin as investors recalibrate
The Irish investment market could benefit from the UK’s impending withdrawal from the European Union.
• End of EU cash forces search for alternatives
The EU has ploughed €43bn (£35.4bn) of long-term investment into the UK over the past eight years. Funding recipients have included regeneration schemes, social housing, university investment, skills and infrastructure, many in areas that voted to leave the EU.
• EU referendum leads to exciting investment opportunities
• The future of overseas investment
Nick Saner, Robert Share and James Burton look at how the UK can retain its draw to overseas investors
• Planning notes: Fail to plan or plan to fail?
Martin Edwards looks at the challenges faced by the planning system, both past and future
• A sustainable future?
• William Newton: We must bridge the UK’s civic gap if we are to attract and retain money and talent
The UK has been plunged into a period of uncertainty. From the collapse of the pound, to the ruptured leadership of both the Tories and Labour, the past few days have felt like the greatest upheaval to our country I can remember.
• Morgan Garfield: a brighter side of Brexit uncertainly
Sadly we have arrived at the end of the Welsh football dream. Ronaldo has cruelly forced me to return from France and join everyone else in pondering the impact of Brexit on real estate.
• Editor’s comment: What we must not do is talk ourselves into a slowdown
• Melanie Leech: The government must not let Brexit hinder progress and ensure market confidence is maintained
Just over a year ago, I wrote a column for this magazine after the general election, outlining the certainties and uncertainties presented by the new government. Although a referendum on the UK’s EU membership topped the latter list, I don’t think I am alone in not having foreseen what we have seen unfold.
• Segro’s Sleath says ‘game has changed’ post Brexit vote
Segro chief executive David Sleath has warned the industry will have to be “extremely selective” about its policy priorities when lobbying a “distracted” government.
• Robert Guest: Sorry, Gove and Brexiteers: The experts are right
“People in this country have had enough of experts,” said Michael Gove, one of the leaders of the campaign for Brexit.
Alan Carter: Hunger for income has not disappeared
The outcome was unexpected, the reaction predictable and rational. The quoted sector rose by 8% in the week ahead of the referendum, and fell by 22% over the next two trading days.
• Bill Hughes: The EU result leaves Britain in the balance
For a lot of people – but clearly not the majority – last Friday was supposed to be just another day. Instead we were immediately faced with the prospect of prolonged uncertainty and, as reality set in, we began to ask ourselves question after question: how did it happen, what happens next, and will life ever be the same again?
• Alex Jeffrey: Amid the short-term volatility, good deals await savvy players
• Residential: dangerous to generalise
“We need to see how this market is going to settle down, and anyone who thinks he knows the answer to all these things, with all due respects, is talking out of his backside.” So says Gerald Ronson, residential and commercial developer, philanthropist and property grandee.
• London resi sees Brexit boost
Residential instructions in London trebled in the week following the UK’s decision to leave the European Union, according to estate agents Douglas & Gordon.
• Murray promises ‘certainty’ for housing industry post-Brexit
Residential analysis: an international sliver of hope for PCL
The devaluation of sterling accompanying the referendum could see a glut of prime London investment, but will it be enough to increase prices?
• Housing market ready to tumble
• McCarthy & Stone sees ‘uncertainty’
• Housebuilder shares rally
• ‘Limited’ Brexit impact on digs
Empiric Student Property predicts a “limited” Brexit impact on the UK student housing sector.
• Fears for Northern Powerhouse as focus shifts to Brexit deal
SEE ALSO:
• Brexit: the day after the referendum. Click here to revisit the blog to find out what happened to the property sector on 24 June, when the EU referendum result was announced.
