Brexit Update: Funds Freeze Transactions as UK Property Markets Suffer

July 6th, 2016

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.

 

Exchange Rates

£1 GBP = $1.29 USD

€1 EUR = $1.11 USD

(as of 9:30 AM EST, 7/6/2016)

 

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