In corporate news, the Berlin government’s move to freeze rents are set to put real estate companies such as Deutsche Wohnen, Ado Properties and Vonovia
What is the impact of Brexit on the UK real estate foreign investment?
Foreigners buy in the UK because it’s an English-speaking portal into the EU and because there’s a chronic shortage of properties in the major cities and towns of the UK. This normally provides good potential capital growth and rather better rent yields than other countries, especially with the landlord-friendly tenancy laws.
The problem with Brexit is that such foreign investors have their base currencies as something other than sterling. So even allowing for some minor growth in property values (which is debatable anyway), it would not cover the 15–18% drop in book value if, for example, you’re a HK or Singapore investor.
So British properties are now the bad risk items in many foreign property portfolios. I have heard of 2 funds that disposed of their London portfolios recently. One is a US fund and the other is a EU country fund. Oh, and there are several Asian funds looking to exit too.