Richard Pickering, Head of UK Research & Insight gives a personal view of the business and role of property in new Europe. This is the second of his New Europe weekly email updates.
September and May. Two candidates emerged in the race to become the UK’s next Prime Minister. The pro-Leave Leadsom would have invoked Article 50 in September. Perhaps as a consequence, the markets breathed a sigh of relief when May prevailed. Now with a new Prime Minister well ahead of expectation, the UK can commence early dialogue with the EU – if they let us. May won’t be invoking Article 50 in a hurry and some have said that this is a precursor to discussions. Short term uncertainty continues as a consequence, but with an experienced and perhaps reconciliatory politician at the helm, cautious optimism might return.
Freezes, floods and fires. Initial valuation downgrades did little to stem the tide of redemption requests in open-ended retail funds. At last count, seven of these funds had frozen trading.(although Aberdeen has subsequently reopened its UK Property Fund and UK Property Feeder Unit Trust). Predictably, a flood of international interest in the prospect of ‘fire-sale’ deals ensues. However, the purpose of the suspensions is to mitigate against exactly such events. When one considers that the frozen funds account for less than 3% of the market, an orderly process of sales to increase liquidity shouldn’t swing the dial too much.