Richard Pickering, Head of UK Research & Insight gives a personal view of the business and role of property in ‘New Europe’ , his weekly email update.
From Chequers to China It has been a busy week for Theresa May. Having assembled her cabinet for a briefing last week, May flew to China over the weekend to join the G20 summit. May is under pressure to forge trade deals, especially with the host nation. Healing wounds on Hinkley Point will be important in that regard. Others on her hit list include India, Singapore, Mexico and South Korea. Australia is first up, but most anticipate that this deal will only happen once an agreement is reached with the EU. No easy wins.
Tokens from Tokyo Japan, the world’s third biggest economy, has delivered a stark message to both the UK and the EU prior to the commencement of negotiations. Requesting early clarity on the shape of the discussions, the 15-page document goes on to set out some of the clearest Brexit recommendations to date, aimed at safeguarding Japan’s 440,000 jobs and investment in the EU, half of which is based in the UK. The paper deals with trade tariffs (keep the same), regulation (harmonisation), passporting (grandfathering measures), and cross-border movement of capital. ‘Great tumoil’ is predicted across banking, car manufacturing and pharmaceuticals sectors if single market access is not secured.
Canadian thaws Canada Life has lifted the suspension of its Canlife UK Property funds, albeit subject to a fair value adjustment of 7%. CIO David Marchant points to increased liquidity rather than greater clarity on values as the reason for the move. The only other fund to have its suspension lifted is Aberdeen’s UK Property fund. This leaves five funds frozen. Aviva has indicated that its funds might remain closed for six to eight months, with the others thought to be following suit. Canada Life’s move may now put this decision under renewed pressure.
Dragons swoop Two big purchases have been concluded by Chinese investors in the past week giving a sign of confidence to the central London capital markets. SRE Group (backed by China Minsheng) purchased SocGen’s HQ in Tower Hill for £84.5m, with the bank taking back a lease to 2020. Meanwhile Vanke bought Ryder Court in St James for £115m, marking the developer’s inaugural purchase in the West End. The former owner, Henderson Global Investors had purchased the asset for £82m in 2013, and has since carried out a programme of asset management.