I was very interested to read the comment by Anne Kavanagh covering her concerns about investing in today’s post-Brexit-vote market and the UK’s “risk premium” created because of the uncertainty of current negotiations being handled between the UK and our European counterparts.
At The Lorenz Consultancy, we specialise in acquisitions, disposals and rent reviews in central London commercial property and, from our perspective, the market now is even busier than it was in the build-up to the vote.
While I agree with her that the risks are greater, because we all have no idea as to the outcome of discussions between Theresa May, her team and the 27 EU members, I see no reason why there is not an equal upside to the increased risk as there could be a downside.
The market is based on a mix of rent yield and security of income on most investments and I am quietly confident that massive demand emanating from the tech industry will see the central London market undersupplied in terms of space for many years to come.
Those who are nervous about the market will be sellers and those confident about the outcome of future discussions, and the fact that we are more than likely to do a trade deal and keep some control over immigration and our own laws, will be buyers.
Of course firms like AXA do not want to expose their clients to percentage swing in terms of value, for which the outcome of Brexit discussions could be a catalyst, but there are others among our entrepreneurial clientele who think differently.
Kavanagh mentions that there are still deals to be done in the UK, but pricing needs to reflect the fact that we are likely to be in for a long period of uncertain negotiations.
I suspect she means that she would not pay pre-Brexit prices, although many deals have been done at those figures and beyond.
Anthony Lorenz, managing director, The Lorenz Consultancy