UK real estate investors is as unclear as ever
The amount of global capital flowing into UK real estate has dropped markedly in 2019 as Brexit uncertainty, deadline extensions and fears of a no-deal departure have weighed heavily on the market. As Real Capital Analytics (RCA) showed in its latest global report, based on the first nine months of the year, real estate sales volumes in London fell by 32% year on year. This means Paris became the most highly traded European city for the first time since it RCA began tracking the markets. Overall, European investment volumes in the third quarter were down 5% year on year to €64.8bn. But if the UK is excluded from the equation, then Europe has actually had an increase in transactions this year, both in Q3 and year to date. “The European Central Bank’s ongoing quantitative easing policies are underpinning the attractiveness of real estate in the eyes of investors, particularly when many government and corporate bonds are offering negative yields,” said Tom Leahy, RCA’s senior director of EMEA analytics. Investment in Paris is up 23% on the year, driven by an increase in cross-border activity, particularly from South Korean investors (see Koreans continue march into Europe, page 44). Brexit uncertainty is having the greatest impact on office transactions in London, with deals in the sector now representing the lowest-ever proportion of the overall investment market, RCA said. The situation is being portrayed as a buying opportunity by some (see Betting on the Big Smoke, page 30), although a dearth of assets on the market is somewhat hampering even the most aggressive investors.
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