The Brexit panic is overdone. ‘For real estate investors it is business as usual,’ according to Cameron Spry, head of Investments at Tristan Capital Partners.
Speaking at a ‘Compass’ briefing at Tristan's Mayfair offices on Monday, Spry said Brexit would not change much for his company or its clients.
The UK’s vote to leave the EU is causing much uncertainty in the market, which is set to benefit Europe’s safe have country most of all, said Spry: ‘One of the consequences of Brexit will inevitably be a further increase in allocations to Germany, so I expect prices to stay at current levels or go up.’
The outcome of the vote will also weigh on GDP growth in the UK and put developments on hold. But taking a step back and a considered view, it is not such a big deal, said Spry: ‘Since the crisis we have been investing in short sharp cycles and a period of constant risk, be it Greece or Eurozone trouble. Brexit is a surprise, but not a shock: it has a lot of parallels to other events of the last few years and, like them, it can be managed. We have seen this movie before.’
Above all, Brexit has ‘locked in lower interest rates for longer’ and that will benefit the real estate sector more than other factors might disrupt it. In a low or negative rate world, real estate offers durable and attractive income yields that investors covet, Spry said.
Brexit clause
Some companies are invoking a Brexit clause and pulling out of UK deals, so many sales will simply not happen. On the other hand, many other investors are sensing an opportunity and are eager to step in.
‘Investors know it is a small, short window and that it is not going to stay open for long, so there are a lot of people trying to get through that window right now,’ said Simon Martin, Tristan Capital’s head of Research. ‘From the prism of a dollar investor, things have changed but not necessarily for the worse. As one US client told me last week, Brexit doesn’t stop the clock on real estate investments in the UK or in Europe.’
Tristan, a pan-European firm with €10.5 bn gross assets, has acquired offices in Frankfurt and is in the late stages of buying residential in Dublin, two cities which are set to benefit from a possible ‘exodus’ out of London.
‘Good opportunities always come out of a shake-up like Brexit and we are well positioned to take advantage,’ said Spry. ‘We have seen a lot of shocks in our 15-year life and we have always made more money than we have lost, so we tend to see opportunities rather than problems.’
