London
Will London in 2020 be off-limits, a buying opportunity, or a case of wait-and-see? Those canvassed by Emerging Trends Europe in mid-2019 agree that Brexit uncertainty is impacting the UK capital, but not on how the dynamics of the market will play out, or on the best strategic approach to take. Some are steering clear. “London is a no-go area for us at the moment,” says a German core buyer. Another institutional investor says: “Over 10 years London still makes it into our top 10, but if you take a shorter-term view when you are more dependent on the market to help you out, then London is not even in the top 20. It would be quite gutsy to invest in London over the coming year.” Gauging and pricing the risks associated with Brexit remains troublesome. For some that means keeping their powder dry for at least a little while longer. “While we have not been willing to buy at the prices being asked, there have been a lot of foreign buyers who have bid at higher levels – Korean, Middle Eastern – every year there has been a different sort of capital. We are seeing less interest from those foreign buyers, so we hope to strike a good deal. I do think in the next 12 months we will invest in London again,” says an international investor.
There are those, though, for whom the iron is already hot enough. “If you look at the yield and rent levels in London versus most major European cities, it looks much better value. It is potentially a good buy opportunity when the Brexit mist eventually clears. There will be a buying frenzy then, so we are attempting to do a few things in advance of that,” says one. A UK-based fund manager is even more bullish: “London of ces represent pretty good value, and we are looking to take more risk there at the moment. We feel that is where the smart money should be.” Meanwhile some investors feel more con dent playing the long game in the city’s undersupplied affordable housing sector. “Regardless of Brexit, there is still a housing shortage in the UK. And if there is a megatrend in urbanisation, and people still flock to London, then there is demand for housing, and for affordable housing, so we are happy to keep investing in that strategy.” (Content from PWC emerging trends in real estate Europe 2020)