UK Investors Unfazed By Brexit

It’s a subject where you can’t walk to the local fish and chip shop without hearing someone’s opinion about it, so we decided we may as well contribute by sharing details of a recent survey conducted by JCRA, a financial risk management consultancy.

This survey was undertaken by private equity investment professionals in regards to their thoughts towards the upcoming Brexit later this month. It would appear from the survey results that far more investors are concerned about a possible change in the UK government than a hard-deal Brexit.

Change of government top concern for half of investors

The survey by JCRA also found that 90% of respondents in the private equity industry were actively focused on making new investments in the UK in 2019.

"None of the respondents were concerned about higher interest rates as a risk to their investment appetite in the UK or the availability of debt finance in private equity, although one in five were anxious about currency volatility/sterling weakness," said JCRA.

A no-deal Brexit was considered the biggest risk to their "investment appetite" by just 17% in the survey - fewer than half the 48% who considered a potential change in government to be the most serious problem.

Property investments are high on the agenda

The research showed that 92% of respondents were actively focused on making new property investments in the UK this year, with none concerned about currency volatility and fewer than one in ten anxious about higher interest rates.

Shripal Shah, head of real estate at JCRA, said, “Uncertainty around planning policy and real estate taxation, such as stamp duty, are big drivers for this asset class. We were interested to note, however, that the industry is still committed to the UK despite ongoing Brexit uncertainty, the prospect of potential interest rate hikes and currency volatility.

"Perhaps more surprising is the sanguine view on the availability of debt finance. Many new lenders have come into the market in the past few years, including institutions and challenger banks, but it feels like debt liquidity could have reached its high point in the cycle already.

“The general consensus is that the European real estate sector is in late cycle. Valuations are high and there is a scarcity of attractive new opportunities. The continued trend towards alternatives including residential, hotels, flexible offices and student housing is a theme for 2019."

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Please note, this blog post is not to be considered as investment advice. We recommend you seek independent financial advice and conduct your own due diligence before making any investment.