The UK is still a “safe haven” for property investment despite the Brexit vote, according to Jason Baggaley, manager of the Standard Life Property Income investment trust.
In our latest podcast, Baggaley tells Guy Foster, Brewin’s Head of Research, that “a lot of money still looks at the UK as being a very investable place”, with the fall in the value of the pound since the EU referendum helping to attract commercial property investors from overseas.
Baggaley highlights that the UK has a “very attractive” leasing structure for property investors. “If you buy a building you know it’s yours, and you know the person selling it has the ability to sell it to you. That doesn’t happen everywhere,” he says. “The UK still has safe haven status.”
However he adds that it is “still very early days” to judge the effect on the commercial property market of the UK’s decision to leave the EU. “Brexit is a process not an event, and we’re very early on in that process,” he says.
Although there was initially a “big commotion” following the referendum in June, with open-ended property funds suspending redemptions and reducing valuations, Baggaley says the market has now calmed down. A number of funds are seeing inflows and discounts have narrowed on property investment trusts and Reits.
Weaker sterling has “helped smooth waters” and reduced uncertainty since the vote, he says.
Baggaley also points out that the market had already been slowing from the start of the year, following a period of strong capital growth.
Within the Standard Life Property Income investment trust, Baggaley says he has been “taking a bit of risk off the table”, for example by selling properties needing capital expenditure.
Also in this Brewin podcast, Ben Gutteridge, Head of Fund Research, talks to Helen Zhu, Head of China Equities at asset manager BlackRock, about prospects for the Chinese economy and stock market.
To listen to this or other Brewin Dolphin podcasts, go to www.brewin.co.uk/sharing-our-thinking/podcasts
The value of investments and any income from them can fall and you may get back less than you invested.
If you invest in currencies other than your own, fluctuations in currency value will mean that the value of your investment will move independently of the underlying asset.
All information within this article is for illustrative purposes only and is not intended as investment advice.
The opinions expressed in this podcast are not necessarily the view held throughout Brewin Dolphin Ltd.