Post-Brexit fluctuations in the UK real estate market are likely to be shorter-lived and less severe than many investors expect, and may offer higher-yielding opportunities, according to one property investment management firm.
In its mid-year Investment Strategy Annual 2016, LaSalle Investment Management said the correction in real estate pricing will likely be largely restricted to the UK over the next 18 months.
Additionally, the firm expects medium-term capital inflows “will only be interrupted, not reversed”, and capital repricing in the UK may lead to an ideal environment for foreign investors looking to enter that market.
“Turmoil in capital markets might also open higher-yielding buying opportunities from distressed sellers as the implications of the Brexit vote in the UK ripple around the world,” , LaSalle’s global head of research and strategy, Jacques Gordon, said.
He said investors should also look for similar opportunities in other global markets.
“Although the UK has been the epicentre for political and financial tremors since June 24, the law of unintended consequences suggests that investors should also closely watch for ripple effects in the EU, North America and even all the way to Asia-Pacific,” he said.
The report found that Brexit fallout in the Asia-Pacific region would be limited, noting that intra-regional trade has outpaced trade with other parts of the world since the GFC.
LaSalle’s head of research for the Asia-Pacific, Elysia Tse, said ongoing economic instability elsewhere in the world would likely make opportunities in the region more attractive.
“If more volatility or uncertainties arise in other parts of the world, Asia-Pacific’s relatively stable collection of nation states and treaties could be viewed more favourably by international investors,” she said.