The Opportunity of the Brexit
The Brexit has been a hard economic blow for many sectors of the economy, including the real estate? We analyze it.
When the past June 23 is held the referendum on whether the United Kingdom should remain in the European Union, everything seemed to indicate that would win the Yes, and came out, of course, but as in the worst nightmares came out the Yes to the Brexit, or the England out of the EU. On the morning of the 24, many English woke up with the insane feeling of failure, the despair is spread and several citizens began to collect signatures for celebrate other referendum, all in vain, the road to dissociate from the rest of the continent already was underway.
David Cameron (he alone) has put in check to all the countries that make up Europe, but more serious for the United Kingdom, has put at risk many large investments for his country. Scotland has threatened with exit of the United Kingdom for continue in the Union, but this not going to stop the process open, so the treated international subscribed by the countries must be revised and endorsed for adjusted to the new situation.
What happens with the real estate?
Disastrous possibilities have been shuffled before referendum, this has made some investors began to «abandon» the Kingdom, and, more specifically, the City or Financial City (London). But until days after of the Brexit not jumped the scandal, several fund managers would have created a sort of «corralito» to prevent the outflow of capital in an initial amount of 10,500 million of euros.
Standard Life Investments initiated this effect to curb the output of 3,200 million euros from its real estate fund, curiously days earlier, they advised tranquility to its customers. The next day joined Aviva (with the suspension of 2,100 million euros) and M & G Investments (with a temporary suspension of 5,200 million euros in real estate titles). This latter company has 80 years old and operates in 18 countries.
In the same week it advertised other three managers a brake to its real estate funds. Canada Life with 524 million euros, Columbia Threadneedle with 1,600 million euros and Henderson Global Investors with 4,500 million euros, thus they added to the first three, achieving the paralysis of 17.124 million euros, 60% of the funds of the United Kingdom, almost nothing.
This brake on the trading in real estate funds is due to the excessive demand for redemptions by investors. Of course the cessation of these funds comes to ensure the balance of its clients, since the liquidity of real estate assets requires time, you think that a building is not a good that you can sell in hours or minutes, needed days to perform the operation, and, sometimes, even weeks.
How affects the Brexit to the Spanish real estate sector?
The magazine specialized Bloomberg joked about the loss of the dream Spanish, to Englishmen likes much the Sun of the Bull skin, but now they have each time farther and more expensive. We will not be few who have heard the cliché that the market does not like the changes, but the reality is that the word “Market” implies the concept of change. Thus, the devaluation of the pound to levels from the end of the last century has slowed the improvement experienced by the British brick (booming from 2013).
Yet have not begun to show signs in its Spanish counterpart, despite the irony of Bloomberg, but it will notice, Spain is the country of destination preferred by the British, which reach up to 21% on the purchase of properties with respect to the total of foreigners, they buy more. The good news for the Spanish sector is that the nationality of the buyers has diversified over the years.
The promoters expected that the Costa del Sol will be the most affected, given that 20% of real estate purchases are of persons of the United Kingdom, companies such as Diana Morales Properties or Spanish Property Insight have already warned the slowdown in the number of consultations by the British, has been significant since became a reality the dreaded «Yes» to the Brexit. The hope now is focused in that the investors of others countries cover the lack of British promoters, at least until is clarify the new status financial European.
An opportunity for the real estate of luxury?
But not everything is bad news. Lucas Fox International Properties have registered a large number of calls from the United Kingdom (supporters of the Remain, obviously) interested in the Spanish market. In the last ten days, the change has been significant, according to the company, its customers have the intended to leave the Kingdom for settle in Spain.
The lucky cities would be Madrid, Barcelona and Valencia, due to the possibilities of employment in the area and that the Spanish economy is recovers, it seems, inexorably. Many of these customers shuffled the install of business or to open one new, for this the banks Spanish offer attractive mortgages. The number of British citizens who want to leave their country after the Brexit has increased by 30%, which allows us to glimpse the displeasure of citizenship.
It is estimated that nearly one million British reside in Spain on a regular basis, their nervousness because of the situation in which they will find by ceasing to be a citizen of the Union is obvious. Many people think to sell, and back, in these cases the weakness of the pound may play in favour, if they sell, their purchasing power will increase thanks to the euro. All forms of investment in real estate assets in Spain remains attractive, given that prices are still between 30% and 35% below the peak reached in 2007.
Over time the situation in the United Kingdom will be consolidated, the pound will return to positions of some stability and the euro zone will continue its march. But still need to do this and already from Paris or Frankfurt are moving with the intention of capturing the financial institutions headquartered in the City that will need to move to other countries in Europe, the Spanish cities of Madrid and Barcelona have something to say, and, if it capture any, with this will come the real estate opportunities (transfer of offices Directors and other staff). There is not all told, but if someone can leave benefit is the real estate market of luxury in Spain.
Disclosure: The Luxonomist is not responsible about the views expressed in the article and has no business relationship with any of the companies listed on it.