A recent survey of international investors’ attitude to UK property, undertaken by JLL, has found that 72 percent of overseas investors see the fall in sterling as an opportunity to invest in the UK. 27 percent of those surveyed said that it was an immediate opportunity, with 45 percent agreeing but planning to wait.
The survey was conducted amongst JLL’s global investor client base to gauge sentiment into UK commercial property post the EU referendum result.
63 percent of those surveyed are not planning on making any changes to their investment strategies until a new UK and EU relationship is drawn up, although a significant minority of 25 percent said that they would reduce allocations to the UK in the near term.
55 percent expected that while occupier demand may decrease as a result of Brexit in the short term, it will bounce back.
Investors perceive alternative sectors, such as healthcare and student housing, to be least exposed to Brexit, along with logistics and Central London retail, while the Central London office market is regarded as more exposed in the short term.
39 percent believe that London will remain the entry point for the majority of investors only if the UK has access to the single market, while 35 percent feel that London will remain the entry point for the majority of investors regardless of the new relationship.
Commenting on the findings, JLL UK CEO Chris Ireland, said: “The survey shows that some investors are very much keeping their powder dry until they see more details of a new agreement between the UK and the EU.
“Investment turnover has reduced in the immediate aftermath of the referendum, but we continue to see robust demand from private overseas investors in particular. Larger institutional investors are taking a more cautious approach and will need time to evaluate market sentiment. This will impact liquidity for larger lot sizes in the near term, but pricing will continue to be supported by record low long term interest rates and the depreciation of the pound.”
Ben Burston, Director in JLL’s Research team, added: “Notwithstanding short term volatility, London remains firmly in the sights of global investors looking to build their allocations to real estate over the long term, and a deep pool of equity capital stands ready to step in when signs of stability emerge.”