London will continue to be a destination for global capital, but not until Brexit is sorted out and exchange rates stabilise.
The UK market has weathered the storms fairly well so far but the uncertainty is causing huge frustration. Some are taking a wait and see approach whilst other investors are taking advantage of the reduced liquidity levels.
It’s not just about London
There is significant interest in the UK regions – we can often focus very much on London but there were clear signs of investment opportunities across the UK, for example, The Mayor of the West Midlands launched £10bn worth of housing, regeneration, commercial and infrastructure development opportunities.
Is high street retail dead?
Whilst not quite that pessimistic, there are clear challenges in the retail sector.
On the one hand, we’ve seen some of the highest number of insolvencies in the UK recently with a number of household names reducing their real estate footprint or disappearing all together so if the retail industry is to survive, it needs to find a radical approach and identify innovative solutions. On the flip side, there are opportunities for canny value add investors to find some bargains.
Checking in for hotel deals
The hotels market in the UK and across Europe is a hot area right now.
Investors see real value in hotels and there is more focus on this market from private equity and real estate funds looking for alternative asset classes and a range of new investors from the Middle East and Asia. They are attracted by strong underlying performance data (hotels is one of the least affected markets as a result of on-going Brexit discussions) and a constant stream of new and innovative brands.
Asia’s shopping list
Investors from Singapore and Korea are showing strong buying signals for assets across Europe with Japanese investors continuing to mobilise for outbound investment.
Whilst London has been a favourite destination, Brexit could mean that they start shopping further afield in Europe. They have already been looking at developed European markets beyond London for some time now, notably France, Germany and Belgium.
But the challenges of finding core assets at attractive rates will drive some Asian investors to look further afield into developing European markets, with a strong interest now developing in Poland from Korean investors in particular.