With Brexit hanging in the balance, a general election now weeks away, persistently low interest rates and high street store closures soaring, many investors’ eyes are on property. But what are investment companies’ views on the sector and what does the future hold for this asset class?
On Tuesday 5 November the Association of Investment Companies (AIC) held a media lunch with managers from the Property – UK Commercial sector. Peter Lowe, Manager of BMO Real Estate Investments, and Will Fulton, Manager of UK Commercial Property REIT, discussed their investment strategies and the outlook for the sector. Their thoughts have been compiled alongside comments from Stephen Inglis, CEO of London & Scottish Property Investment Management Limited, the asset manager of Regional REIT.
What impact is the political uncertainty and Brexit having on UK property?
Peter Lowe, Manager of BMO Real Estate Investments, said: “The impasse at Westminster and the prospect of a change of government is destabilising for the market. The UK is a vibrant, capable economy with a skilled workforce and many comparative strengths, but the continued delays have paralysed business and are adversely impacting the economy.
“The most immediate impact of the continued uncertainty on the real estate market is the collapse in transaction volumes which have fallen sharply and are now below long-term averages. While there will be continued near-term disruption and the potential for ongoing volatility in markets, the sector is in relatively good health and offers much for the medium-term investor. There is plenty to like about UK real estate, not least the yield premium, income growth in most sectors outside of retail, good levels of occupancy for quality stock and a relative absence of typical ‘late cycle’ behaviour in the lending and development space.”