View more on these topics

Boost for real estate investment expected as election nears

Real-Estate-Agent-House-For-Sale-London-700.jpg

The expectation of a stronger pound is set to bring investor focus back towards sectors such as real estate as the election nears, experts say.

Prime Minister Theresa May announced a snap election last month, to be held on 8 June.

After a sharp sell-off ahead of May’s announcement, the pound surged to a five-month high of $1.2729 against the dollar from a low of $1.2513.

This is the opposite to what investors saw after the referendum last June where overseas firms became more attractive than domestic companies, given a significant drop in the pound.

AJ Bell investment director Russ Mould says key names in the general and food retail sectors such as Next, Dunelm and Mothercare could get a boost to their share prices if sterling remains at current levels or appreciates.

The real estate investment trusts and real estate investment services sectors could also benefit from a stronger currency, in addition to falling bond yields and cheaper valuations.

Mould says: “There is a risk that a sudden jump in sterling dampens overseas interest in British assets, but the UK still offers a rule of law and an independent central bank while a strong – or at least more stable – currency could reaffirm the long-term appeal of UK commercial property to potential buyers.”

Progeny Asset Management investment manager David Battersby argues the election will not change the fundamentals and stocks will remain cheap.

He says: “We do not recommend reducing exposure to the UK stockmarket. Some market analysts forecast the FTSE to break 7,800 and there are attractive opportunities in high-yield stocks with sustainable dividends.

“Sectors such as telecoms, oil, support services and pharmaceuticals all offer useful yields looking further ahead.”

But The Share Centre chief executive Richard Stone warns of “sharp and sudden” moves in opinion polls over the next six weeks and says investors should stay alert.

He says: “If investors can ride through the short-term volatility, and assuming opinion polls are right, then a stronger Government with the ability to play a longer negotiating game on Brexit without having to have an eye on an election in 2020 should be a positive outcome for the economy and for markets.”

Recommended

Nationwide-building-2013-700x450.jpg

Nationwide H1 profits slip to £696m as commercial real estate arm axed

Nationwide’s half-year profits before tax fell 13 per cent to £696m and the firm will close its Commercial Real Estate arm due to Brexit fallout. At the end of September last year the firm’s profits were £802m. Nationwide says the profit drop is due to record low interest rates, stiff competition in the mortgage market […]

Savills buys US real estate services firm Studley

Savills has bought New York-based independent commercial real estate services firm Studley in a £154m deal. The purchase price is payable in instalments between 30 May, the completion date for the deal, and 31 May 2017. It will be paid in cash, ordinary Savills shares and promissory notes, which in effect are promises to pay […]

London still top for real estate investors

London is still the best market for real estate investors, says Experian.Each quarter Experian converts the historic and future performance of over 220 property markets in the UK into a league table of investment performance. Among the stronger performers within the eastern region were the Norwich office market and the Cambridge industrial market. These two […]

Can you put a hat on?

By Sarah Scott, marketing consultant You might think the question in the title is a strange one. Perhaps even more so when you learn that it’s one of several asked as part of an assessment for Employment Support Allowance eligibility in the opening scenes of the 2016 film, ‘I, Daniel Blake’. Daniel is a carpenter […]

Newsletter

News and expert analysis straight to your inbox

Sign up