So there we have it, as assumed in this note for the last two months, Boris Johnson is the new Prime Minister, but now the real work starts. Can Johnson somehow convince the EU to change their Withdrawal Agreement to remove the controversial Irish Backstop? Or will he, on Halloween of all dates, take Britain out of the EU in a ‘No Deal’ scenario?
Betfair currently have it priced up at 6/4 to leave and 5/8 we don’t by the 31st October – whilst ‘No Deal’ is 7/4. Therefore whilst Johnson continues to push the ‘No Deal’ rhetoric, realistically it’s still difficult. Personally I don’t see how, unless there’s some massive change of heart on both sides of the benches, ‘No Deal’ passes through Westminster – proroguing or not.
So where does that leave us? It really is unchartered territory, but the message, particularly within the commercial property sector is to look long term. Look beyond Brexit.
The drop in the Pound should tempt overseas investors back in and US Private Equity will be looking to pick up any perceived favourable pricing, together with the currency play on offer, and so, this period between now and end Q1 2020 offers an opportunity.
Industrial and logistics, as well as South East offices, continue to be under-supplied, despite the recent uptick in speculative development in logistics, particularly. Occupiers still need new offices and warehouses therefore take-up has remained robust. Edge of urban, multi-let industrials will continue to be in vogue.
With development finance likely to become harder to come by as the Brexit uncertainty continues then anticipate pricing for 15 years plus income to come in, although covenant strength will play a part.
Brexit or No Brexit, Deal or No Deal, the fundamentals (outside of retail) remain strong and it is important to remember that. The only guarantee I’ll give is… England will win the Ashes and you can get that at 5/6. Thank me later.
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