The number of enquiries from investors has increased as they show an interest in sterling-linked assets. They have shown a particular interest in commercial property as the current exchange rate works favourably for them.
However, the EU referendum result has concerned many investors and this could see them hold onto capital until the future of UK politics as well as the economy becomes clearer.
The UK property sector has seen large investments come from sovereign wealth funds such as Norway’s Government Pension Fund Global and Singapore’s GIC and there is a possibility that they could put more capital into the market while the strength of the pound remains weak.
Funds from the Middle East could also take up this opportunity to purchase buildings at a cheaper price but yields are unlikely to be higher because it will be paid in sterling
Further purchases are likely to be made by GIC, particularly in the student accommodation sector because these are low risk and demand is high. Office space property investment in London is unlikely to remain in demand as many financial institutions are likely to leave the UK following the referendum result.
Research suggests that many of the sovereign wealth funds that invest in real estate increased to 62% during 2016, this is an increase on previous years.
The FTSE 100 is up around 2% and this could mean that foreign investors may look to invest. This is because blue chip companies are trading beyond the UK in order to take advantage of the weaker pound. There is also the potential for mergers to take place as investors look to purchase smaller companies.
As a result of the weakening pound, there is likely to be plenty of opportunities for companies to purchase property and look at mergers due to the uncertainty currently surrounding the UK at this moment in time.
Analysts believe that the pound could drop as low as $1.15 by end of the year and investors are holding back in the hope that things swing even more in their favour.
Interest has started to stir in sterling assets but if investors purchased now, should the pound devalue further they would lose money on their investments.
There is plenty of investment lurking in the shadows, waiting for the right opportunity but the fact that enquiries are on the rise does show that investors are starting to consider making moves.
