The UK market now is a tale of two investors, experts agreed at Real Asset Media’s UK Investment Outlook: FDI and Capital Flows, which was held in July at Nuveen’s London headquarters.
‘I think there are two distinct pools when it comes to UK investing,’ saidJessica Hardman, Managing Director, Head of UK Group, DWS. ‘You have the investors who are able to look long-term and actually see the opportunity of a shrinking pool of competitors because of the political disruption and they want to come and take advantage of that, while the other pool waits in the wings and is nervous about taking investment decisions’.
It is a fact that with the uncertainty over Brexit ‘the UK is going through a destructive phase at the moment and that is really showing in the lower volumes’.
Volumes peaked in 2015, the year before the EU referendum, said Tom Leahy, Director of Market Analysis EMEA, Real Capital Analytics: ‘But last year there were still £59 bln worth of deals in the UK, just second behind Germany in Europe. This year the uncertainty over the Brexit deadline and then the delay has led to a wait-and-see attitude, so the last two quarters have been quite slow. The market is at a standstill, but the demand is there’.
The British market is like an engine ready to rev up again. ‘What we are seeing in DWS is a lot of a capital that still is interested in the London and UK markets,’ said Hardman. ‘Some may need to be reminded of the long-term fundamentals, but they are open to that conversation with expert advisors. Our transactions team in the UK is very busy and that’s a good sign’.
German capital, in particular, likes the UK and as long-term investors they like the fact that it has different cycles and different dynamics and it can complement a German-heavy portfolio well. ‘They see Brexit as a short-term disruption and want to take advantage of the fact that there are less buyers around which means less competition,’ she said.
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