Analysis: Brexit hasn’t dented continental confidence in UK – yet

In February, Dutch pension scheme PGGM announced it had bought a build-to-rent development site in Bristol, UK, as part of a newly formed partnership with Legal & General Capital (LGC).  While the deal wasn’t the first of its kind in the UK (in 2013, residential landlord Grainger entered a partnership with APG, another Dutch pension fund), some industry experts predicted that it could be the start of a new trend. However, in light of the June 23 ‘Brexit’ referendum, could such forecasts have been premature? Last month, a Preqin survey of 90 institutional investors with exposure to UK real estate indicated 57% of respondents would invest less in the UK over the next 12 months. Speaking to Funds Europe, a spokesperson for PGGM said that quite to the contrary, the firm intended to further develop its partnership with L&G moving forward. “While we will look closely at developments, there is no question of PGGM moving away entirely from the UK,” they said. “We think investments in UK real estate will continue to provide us with a stable cash flow, vital for paying out pensions in the long term.” PGGM’s sentiments are shared by Menno Middeldorp, senior investment strategist at APG. “While the referendum undoubtedly has the potential to change the UK, and Europe, it’s still too early to tell – and while the UK may not be part of Europe in future, it remains part of the world,” he said. “Save for an unexpected economic catastrophe in the UK, there’s nothing on the medium-term horizon we can’t sit through, or that will cause us to fundamentally reappraise the UK.” Moreover, despite numerous UK property fund suspensions in recent weeks, there are signs foreign buyers are taking advantage of the weak pound to snap up British assets, according to Henderson. The firm says that despite a wave of redemptions from retail investors, institutions have pumped £1 billion (€1.2 billion) net into its funds since June 23. ©2016 funds europe

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