Investor confidence throughout Covid and Brexit has swung radically between despair and hope. Covid rocked the foundations of our built environment, economy and businesses, causing a significant variations dispersion between performance in industries and investment types.
We have seen Covid extremes such as a Coventry shopping centre being sold by auction in February 2021 for £4.85m, having been valued eight years earlier at £37m, and the value of Peloton rising 440% during 2020 only to drop by 76% during 2021.
Now, with the Consumer Price Index climbing up to 5.4% by the end of 2021 – the highest since 1992 – and the knock-on effect from global sanctions due to the invasion in Ukraine, investors are scrambling to hedge against inflation headwinds.
After the woes of the pandemic-induced slump, investor confidence made a cautionary return in the second half of 2021, capped by potential concerns over new Covid variants and Brexit. It was during this period that we saw investor activity through Brickowner return to pre-pandemic levels, reflected in the amounts invested per investor increasing.
Against a backdrop of residential spending sprees fuelled by Help to Buy, supply chain constraints of building materials linked to Covid and a stuttered end to lockdown, there has been recent strong evidence of global institutions backing the longevity of UK property post-Brexit and post-Covid. Recent positive evidence of institutional investor confidence includes Google’s $1bn London office purchase, Knight Frank’s prediction of £60bn of foreign investment in the London office market over the next five years and L&G’s Managed Fund making acquisitions across the office, retail, leisure and industrial sectors.
The property market of the UK, with its long history and enviable legal system, clearly has unique selling points to attract investors from around the world, and confidence appears to be on the rise. Early signs this year from investors on the Brickowner platform have shown a more bullish appetite for property, reflecting these trends.
Yet, options for a private investor to access the UK property investment market are limited and expensive. Potentially, this could be linked to investors wanting exposure to UK property as an inflationary hedge, and not wanting to do this via listed property funds due to the cash drag caused by these funds being obliged to keep large cash reserves of 20% or more in order to deal with possible redemptions.
Investors appear to see the UK as the right place for growth, and this is testament to the long-term stability and resilience of the UK property market. But these are not normal times, and reading or accessing the UK property investment market is not straightforward for the private investor, as most closed-ended offline funds have high minimum investments, which are out of reach for most investors.
Harnessing technology to streamline the investor onboarding and management process, such as we do at Brickowner, creates the double benefit of providing investors with a simple way to access and invest in property with more reasonable investment amounts, while also helping the property asset managers and developers by relieving them of the administrative burden of manually onboarding and managing investors.
Activity on the Brickowner platform gives us interesting insights into investor confidence and sentiment. As people want to move money into real estate, we are well-placed to support both investors and asset managers to make investing in property easier, quicker and better.
Fred Bristol is CEO of Brickowner
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