Brexit is once again starting to rise up the agendas of real estate investors after being pushed to the sidelines by Covid-19, according to new research from UBS.
The UK’s EU exit still poses risks for international investors, but UBS believes it could actually create opportunities for overseas and domestic buyers – particularly if a long-term view can be taken and short-term volatility accepted.
There are no current signs of distress in the market, but there is some movement in the value-add sector due to both the coronavirus pandemic and Brexit, and this is where UBS believes value can be found.
Also with few active buyers in the market, some deals with attractive pricing are emerging, and with yields compressing further on corporate debt and government bonds the yield spread with real estate has widened.
In central London, despite the impact of travel restrictions limiting activity as overseas investors make up 75% of the market, yields of 4.25% in the City and 3.75% in the West End provide attractive margins over the sub-3% yields in cities such as Berlin, Amsterdam and Paris.