Even the most ardent of Leavers would surely not have predicted this. On Wednesday, Donald Tusk scorned Theresa May’s “pick and mix” Brexit plan, warning that there would be “negative economic consequences”.
Yet against the backdrop of ongoing political uncertainty, international interest in UK real estate continues unabated – and is even increasing in some sectors.
Brexit Britain is not quite the busted flush the EU would have us believe, it seems. As we reveal this week, the Saudi prince co-owner of Sheffield United FC has made a “substantial” investment in Darin Partners, which plans to spend £200m on acquisitions this year. Meanwhile, Hillwood – one of the biggest developers in the US, run by Ross Perot Jr, son of ex-US presidential candidate Ross Perot Snr – has teamed up with Goya Developments to embark on a speculative logistics development drive in London and the South East.
They are not the only ones piling into the UK just as investors were expected to head for the exit. Last week, a Japanese investor made its first investment in the UK real estate sector with the £154m acquisition of First Avenue House in London’s Midtown (at an astonishing 3.25% yield), and several South Korean funds are circling central London offices with big money to spend.
So why are they so unperturbed by Brexit? Could it be that in the big scheme of things, it is just not that big a deal?
Could it be that in the big scheme of things, Brexit is just not that big a deal?
European investors may not take such a benign view, but outside Europe, it seems that investors continue to see the UK as a safe haven, regardless of Brexit, certainly compared with their own jurisdictions. Plus, where better to invest than a country that boasts some of the best trophy assets and best-performing real estate sectors in the world?
It is no coincidence that so many love London offices or that Darin and Hillwood are both eyeing the industrial and logistics market, one of the strongest-performing sectors in UK property in recent years.
There is also perhaps an element of keep calm and carry on. Why sit on your hands and let others snap up opportunities when, for all the political posturing, no one yet knows what Brexit will look like?
Carry on… Mipim
Many investors will, of course, be descending on Mipim next week in the hope of laying the foundations for further investments in the UK. I suspect the mood in Cannes this year will be very different to previous years in the wake of the Presidents Club revelations.
There are rumours that some national newspapers are sending large teams of reporters to expose the worst of the “booze and hooker fest”, as it was memorably described by Private Eye. They won’t go back empty handed and make no mistake, any behaviour that can even be misconstrued as unacceptable, whether it really is or not, will be seized upon.
Property Week will also be attending mob-handed, but we are more interested in deal gossip. That is not to say we don’t think Time’s Up for inappropriate behaviour. In the past, some of the antics at the fringes of Mipim have been akin to a Carry On film without the laughs. Nobody will be laughing after this year’s event if the industry is caught out again.