Brexit Update: Funds Freeze Transactions as UK Property Markets Suffer
Funds Freeze Transactions as UK Property Markets Suffer
The commercial real estate market has arguably been one of the hardest hit sectors in the United Kingdom (UK) in the aftermath of Brexit. Domestic property markets had been on the incline for several years, but had already begun to cool down earlier this year, with foreign inflows to commercial real estate falling by as much as 50 percent. The decision to exit the European Union (EU) has exacerbated declines.
Foreign investment in the £800 billion commercial market is drying up. Asset managers are beginning to freeze real estate fund trading. Just this week three multi-billion dollar real estate funds from Standard Life, M&G Investments and Aviva Investors blocked withdrawals and suspended fund transactions. The funds, which are some of the UK’s largest, cited unprecedented uncertainty and liquidity concerns. The funds have already lost more than 30 percent since the UK referendum. Analysts expect other funds to take similar actions as the market perceives increased instability around business growth in London and across the UK more generally.
£1 GBP = $1.29 USD
€1 EUR = $1.11 USD
(as of 9:30 AM EST, 7/6/2016)
#Brexit: What’s Trending?
GBP Hits New Low – The British Pound hit a new low, falling below $1.30 to $1.28 in overnight trading.
UK M&A Put on Hold – KPMG reported a sudden freeze on M&A activity among UK companies as the side effects of Brexit continue to unfold. The consulting firm also warned of the potential for hostile takeovers from foreign investors.
Merkel Supports Delayed Negotiations – Despite conflicting opinions from fellow EU leaders, German Chancellor Angela Merkel said the bloc would wait until the UK applied for Article 50 under the Lisbon Treaty before beginning negotiations talks.
Companies Plan Price Increases in UK – Several technology companies are allegedly planning moderate price increases on consumer products in the UK in the near future.
UK Services Sector Declines – UK services firms saw declines and cancellations of orders, trigging a fall off in business confidence. The Purchasing Managers’ Index fell to a more than three-year low.