Property sector steels for second Brexit lull

By Daniela Esnerova

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Nov 13, 2018
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Property investors are looking at the lull in the sector which followed the UK’s vote to leave the EU and are preparing for a similar scenario after Brexit.

Speaking at an Association of Investment Companies round-table on prospects for the property sector, Ediston Property’s investment manager Calum Bruce says: “There is no consensus view as to what will happen, but it is likely that there will be a pause and more subdued property market activity.

“This occurred immediately after the EU referendum in 2016, when investors and tenants alike considered the uncertainties of Brexit.

In the case of post-Brexit volatility Bruce recommended investors to diversify well their UK regional property portfolio with a focus on dividend income investments, closer linked to the wider financial market.”

Impact of Brexit

Custodian REIT fund manager Richard Shepherd-Cross downplays Brexit’s impact of the sector, saying that while Brexit talks is a source for uncertainty, “day-to-day pressures of a normal property cycle are still having a much greater impact on the market.”

Shepherd-Cross says: “Brexit is having much less of an impact than the pundits predicted. In the three months post the EU referendum the market took a hit but also fully recovered and has pushed on since then.”

Shepherd-Cross also dismissed the forecast of a wide-scale collapse of businesses leading to tenant default post-Brexit. He expects pre- and post-Brexit, as well as current pressures on rents, caused by demands, to remain.

Opportunities

Panellists also shared their outlook for the sector. Managing partner of Impact Health Partners, Andrew Cowley, sees opportunities in the care sector arising from an ageing population.

Cowley says: “The number of people aged over 85 in the UK is forecast to double to 3.2m from 2016 to 2040. In 2018, 14.7 per cent of the over 85s required the kind of care which can only be provided in a residential care home or hospital.

“From its peak in 1996, the UK has seen beds declining 17 per cent to 466,000 beds in 2018. Over that period, there was a major shift from beds provided by government entities to beds provided by independent operators. As a result, the independent sector has experienced sustained, above-inflation growth.

“The fundamentals of our market are strong, with growing demand for beds and limited supply.”

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