The pollsters called it wrong, again. The UK has voted to leave the European Union (EU).
While this was always a possibility, few markets had fully priced-in the risk – hence the sharp movements in many asset classes following the vote.
Prime Minister David Cameron resigned following the vote and was quickly replaced by Theresa May. It will now fall to the new PM to trigger Article 50 (following Parliamentary
approval) and fire the starting gun for the UK’s exit from the EU. This is likely to happen in early 2017, commencing a two-year period of negotiations, as the UK seeks to establish the terms of its new relationship with Europe.
The vote for BREXIT has already had implications for real estate investors, many of which sold out of open-ended property funds ahead of the vote. Almost immediately after the result was published, several fund managers introduced pricing adjustments on their funds, in an attempt to slow outflows. This was followed by the suspension of trading in several funds and the imposition of sharper pricing adjustments for many of those remaining open. Subsequent asset sales improved liquidity and one suspended fund has reopened with a lower pricing adjustment, since removed. Another, which remained open, has also reduced its pricing adjustment, while others remain suspended. Real estate transactions had fallen in Q1 2016, compared with Q1 and Q4 2015, but with little pricing impact. Q2 2016 followed a similar pattern, albeit with an upward move in yields.
Source : AXA Real Estate