dominos

21

October

2016

Property Funds Resume Trading As Post-Brexit Panic Subsides In Britain

Business As Usual for the UK’s Real Estate Market

The nervousness which affected the UK’s real estate markets following the Brexit vote has subsided. Some property funds have eased penalties on redemptions by investors, while others have resumed trading.

At least seven major property funds had halted trading or put restrictions on redemptions immediately after the Britain’s decision to leave the European Union, as investors tried to cash in their assets managed by these funds.

Among the funds that have commenced trading once again is Columbia Threadneedle Investments which recently reopened its UK Property Fund. The company had either sold or agreed to sell some 25 properties with prices just 1% lower than valuations before the referendum, the firm said, suggesting that Brexit has not had a major impact on UK real estate markets.

“We saw animal spirits drive unprecedented levels of redemptions,” Don Jordison, managing director of property at Columbia Threadneedle said in a statement. “Much of the earlier commentary now appears slightly irrational and more informed reflection has settled the market.”

Aberdeen Asset Management Plc and Canada Life have also reopened trading for their UK property fund. Redemption penalties are still in place, but have been lowered substantially.

Experts were expecting a short-term fall in property prices after Brexit, as domestic buyers adopted a ‘wait and watch’ strategy. On the other hand, dollar-based overseas buyers have been taking the opportunity to snap up UK property and make a saving of around 12%, and there has been a surge in interest in buy-to-let property from investors in the Middle East, Hong Kong and other countries with currencies pegged to the dollar.

Sterling buyers on the other hand remain more cautious than US dollar-denominated peers, with post-Brexit volatility still in evidence across foreign exchange markets resulting in widely varying values. Although the general sentiment for property investment still runs high, there is a definite reduction in buyer activity in the UK’s property markets in the second half of 2016.