The UK property market could benefit from a surge in investment in the second half of this year if the country votes to stay in the eurozone, Kames Capital’s David Wise says.
Property has been hard hit by the uncertainty caused by the impending Brexit vote. Year-on-year volumes are down by nearly a third in the first quarter of 2016 as investor confidence in a sector which has also seen strong capital growth, starts to wane.
According to Wise, investment director within Kames’ property team and co-manager of the Kames Property Income Fund, the impact has been felt most keenly by the larger end of the market, with GBP20 million-plus properties – which tend to be in London and the South East – the worst affected as they would potentially see the greater impact of an exit from the EU.
But Wise said there could be an opportunity for investors after the Brexit referendum on 23 June is concluded.
“Everyone is concerned about the Brexit vote but no one is asking what happens if we vote to stay in the UK,” Wise said.
“Thus far the uncertainty over Brexit has caused the market to slow down in terms of transactions, with a wait and see attitude among investors, but we could see a strong second half for property after the June vote for this reason, if the UK stays in the EU.”
Wise, head of Kames’ direct property team which manages investments worth a total of GBP2.6 billion, added while there was a tendency among international investors to concentrate on the London and South East market, there were a number of opportunities outside the most popular regions.
“A lot of international money remains focused on London, but there are advantages to taking a different approach,” he says.
“Smaller lots – particularly those in the regions between GBP5 million and GBP20 million – can offer the prospect of superior returns and better liquidity for our clients.”