The decision to leave Europe has meant for an uncertain political and economic climate over the past year or so, and it would be fair to say it has taken its toll on both.
Brexit has left many economists fearing that inevitable exit from the European Union will knock British companies for six, exacerbated by the unknown terms of the divorce, strategists for insurance and financial giant Allianz warn that Britain “seems set to endure a significant period of economic uncertainty and weakness now.”
When it comes to UK investment Brexit is not necessarily a bad thing as every cloud has a silver lining as they say, and with all this unpredictability floating around it means there is a good opportunity for the brave and savvy investor to pick up UK property investments at a sizable discount or as I like to say “at Brexit prices.”
The astute stock pickers at San Diego–based Brandes Investment Partners, are investing in British retailers and property-services companies. “Uncertainty tends to lead the market to price in the worst, and that’s really what we’re seeing at this point,” says Amelia Morris, a member of the firm’s international large-cap investment committee.
Among the U.K. property-services stocks, LSL changes hands at 10 times forward-year earnings and offers a dividend yield of 4%, while Countrywide has a P/E of 10 but didn’t pay out a final dividend in 2016.
In the midst of the Brexit storm, the Sterling has definitely taken a bit of a beating with it hovering around $1.31 recently, a drop from $1.50 just before June last year. Sterling’s slump has helped fuel inflation, which the Bank of England predicts will peak around 3% in October.
AS FOR PROPERTY-SERVICES STOCKS, Morris says they’re “where a value investor like us would want to be investing, at the lower end of the cycle.”
Nonetheless, for investors who follow Warren Buffett’s maxim to “be greedy when others are fearful,” the UK property market looks tempting.
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