London Is Not Yet At The Point Of Maximum Pessimism. But Sentiment Is Bad.

“The point of maximum pessimism about the E.U. exit will be early 2019.”

Sentiment towards London real estate is pretty awful and could yet get worse, according to the influential Urban Land Institute and PwC Emerging Trends in Real Estate report.

A survey of more than 800 real estate professionals across Europe undertaken by ULI and PwC ranked London No. 27 out of 31 European cities in terms of sentiment toward investment and development.

The only places ranked worse were Istanbul, Moscow, Athens and Rome — cities that have experienced coups, international sanctions, sovereign debt crises and banking crises, respectively.

London is also the only city where those surveyed for the annual Emerging Trends in Real Estate report felt that both rents and capital values would decrease in 2018, leaving it bottom of the league for expected performance.

The report carries anonymous comments from hundreds of interviewees, and those on London are illuminating.

On the plus side, the sale of prime assets have been buoyed by the devaluation of Sterling. “What Brexit did was devalue the pound, and so instead of buildings being devalued, pricing has remained the same because of the currency,” a financier said.

But this has a downside. “People keep talking about the devaluation of Sterling being a good thing, but they must be using a different scorecard to me because as I see it, that means we’re all poorer,” one global pension fund manager said.

A REIT chief executive made our opening comment on pessimism: “We believe the point of maximum pessimism about the EU exit will be early 2019. If that is the case, we think we will be able to be buying at that point. It will be development sites and short-let buildings in Greater London.”

Real estate is always cyclical, and if the prospects look subdued for London now, there are plenty of people waiting for the right point to buy.

Further reading: A Disastrous Outcome Or Nothing To Fear - What A No-Deal Brexit Would Mean For U.K. Property

What Brexit Could Do For Real Estate, From 4 Investors Who Want It

Meet The Asian Investors Who Are Keeping The London Market Afloat