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Buy the rumour and sell the fact – Brexit and UK property

As we contact UK developers, construction firms and commercial property advisers around the UK ahead of our 5th May China UK Property and Healthcare MarketPlace, we have been struck by the overwhelmingly positive sentiment by both buyers and sellers. It takes me back to my days in the City running proprietary trading desks as well as client funds. Anticipation of good or bad events were more powerful than the events themselves.

Sentiment arbitrage

How many times have you booked into a 5* hotel or 3* Michelin Restaurant then found the high quality service to be a ‘little off’ or the food ‘just average’? Similarly you take a chance in a new City and stumble across a random hotel or restaurant that exceeds all expectations. This sentiment-arbitrage drives decision making at the core of our primeval beings but understanding them makes our investment decisions all the better for it.

Brexit is negative – buy the rumour

The next two years will see politicians, media and business leaders drive the perception of the negative value of Brexit on UK property values. Professional pundits were highly discredited during the run-up to the Brexit vote in June 2016 as their predictions failed to materialise. Notwithstanding the hard negotiations required to secure equitable international trade deals, resilience of British business leaders and sustained believe by our Chinese investors in the UK’s core “Rule of Law” (lets not mention the weak Pound) means that there are plenty of deals to be struck.

Article 50 – sell the fact

Article 50’s effects will take 24 months+ to be felt. However, when does it come time to ‘sell the fact’ given that the ramifications of Article 50 may takes years to become apparent. We believe that Sterling’s Strength will be the key signal and tracking a 3-6 month moving average will be the best way to determine when the UK is topping out and signalling a time to sell. 

Positive sentiment in commercial property and healthcare asset investment

Returning to positive sentiment surrounding the UK property sector, the last ten days has seen significant Chinese related headlines. Ranging from the £1.15bn Cheesegrater acquisition to the £96.5m purchase of Fleet Place, building of 15,000 new homes in Barking & Dagenham and substantive progress on ABP’s Royal Dock development, this shows that the Chinese are here to stay. Developers can see the benefit of Chinese equity capital and are growing in confidence in embracing it. Similarly more Chinese investors are seeking to go-it alone and develop their own sites with trusted local construction experts.

Next steps can be found on 5th May

The China UK Property and Healthcare MarketPlace being held with Pinsent Masons and Estates Gazette will shed further light on Chinese investment trends. We have picked some major themes including Residential vs Student accommodation, practical experience of Chinese investment into care homes, sustainable development and where in the UK will Chinese investors find the best risk/reward for commercial real estate. There is only a month to go before this event so if you are interested in meeting Chinese investors, book now.