Since the UK surprised the world in 2016 by voting to leave the European Union, we have all watched on as the British government has pushed forward with the process of negotiating a favorable exit deal before the deadline on the 29 March 2019.
Now here we are in 2019, less than three months away from the deadline, with plenty of uncertainty and several potential outcomes.
Everyone is asking – so what happens now?
For UK businesses, it is important to have a clear strategy for Brexit which can adapt to any of the possible outcomes and to identify the potential threats and opportunities that exist. For us here at Berkeley Assets, we are in a fortunate position that we have a diversified portfolio of assets and we are not reliant on cross-border trade with the EU. As a business that is heavily focused on UK real estate we also see Brexit as a huge opportunity.
In preparation for Brexit, we have focused on raising capital in US dollars from our overseas offices over the past 18 months which is advantageous as it allows us to invest in UK-based assets at a lower price while the British pound has suffered consistent weakness.
Post Brexit, regardless of the outcome, it is highly probable that the pound will experience significant appreciation over the medium to long term. Brexit panic has driven down UK property prices and opened the door to more favorable deals on projects across the country. This is allowing our real estate division to acquire undervalued assets and positions us well for stronger growth over the next few years.
The UK still has a housing crisis where over a million families across England are on the waiting list for housing and between 240,000 and 300,000 new homes need to be build each year until 2030 to satisfy demand. This issue is particularly pressing for the affordable housing market, and this guarantees our real estate lending team and our development team plenty of opportunity regardless of the Brexit outcome.
Our advice to investors is not get too wrapped up in the media storm over Brexit. Look at the opportunities that exist and focus on the fundamentals.
Now is a great time to invest while there is fear in the market and prices are weak. There will certainly be many challenges if Brexit proceeds, however, short-term volatility will ultimately give way to long-term growth and there is still a chance that Brexit will be cancelled altogether.
Let’s just hope that the British politicians have the good sense to avoid a no-deal exit scenario.
Contact us at any time if you have any questions or are looking for advice.