Investing in a Post-Brexit World
The quicker-than-expected formation of a new Government in the UK, and the surprise decision by Mark Carney at the Bank of England to hold interest rates at current levels, have helped settle nerves in the market to some extent; but is it enough to win back investor confidence?
The UK's new Prime Minister made it clear during her leadership campaign that ‘Brexit means Brexit’. And with negotiations on the UK's divorce from the EU now firmly underway between Theresa May and counterparts in Germany and France, it's clear that the new leader intends to honour this pledge.
The quicker-than-expected formation of a new Government in the UK, and the surprise decision by Mark Carney at the Bank of England to hold interest rates at current levels, have helped settle nerves in the market to some extent. Likewise, investors have been buoyed by better than expected financial data from the Bank of England. But despite the positives, there remains a great deal of work to be done, and the question now being asked is; what is Brexit anyway?
It is not just leaders in the EU who want an answer sooner rather than later. Investors too need certainty if confidence is to be maintained in the financial health of the UK and the EU.
And, with the UK already having lost its AAA credit rating, and UK banks being downgraded by Moody's over fears about Brexit exposure, the economy is far from out of the woods and pressure is building on the new Government.
So, where should a savvy investor be looking in the post-Brexit world? And how are property investments likely to fare, when compared to other asset classes?
Real estate, real returns?
The key advice for investors watching the Brexit drama unfold – and spooked by talk of possible referendums in France (Frexit) and the Netherlands (Nexit) – is that now is the time to diversify.
Concerns over the economic implications of Brexit have already sent many investors to traditional investment ‘safe-havens’. The price of gold for example rocketed on the back of the UK's decision to leave the EU, and has remained high ever since. Likewise the value of the dollar, despite taking a hit in the immediate aftermath of Brexit has since recovered strongly. And with firms like Microsoft and Morgan Stanley posting better than expected results in July, the S&P 500 and Dow Jones industrials have been driven to fresh heights recently.
So, could investing ‘over the pond’ be a solution for those concerned about Europe's prospects?
There are definite returns to be had in the US. The Rycal Group, currently offering Carlton James investments which specialise in the development of new hospitality real estate in high demand areas, could be just the kind of investment opportunity for those looking to hedge against uncertainty in Europe.
Simon Calton, CEO of the Carlton James Sky Watch Inn Group and Rycal Group, said: “During the referendum campaign much was made about the size of the market in the EU; an economy of some 550 million consumers. Let's not forget though, that in the US consumers spent around $11,372 billion in Q1 2016 alone, a huge market for those willing to look beyond Europe.”
Carlton James Sky Watch Inn Group holds an investment portfolio focused on the hospitality sector in the US. It has recognised the potential of the US market for many years, and used it to deliver returns for investors averaging 17 percent for the past five years.
So how is this being achieved?
Carlton James has made an art of finding the real estate and hospitality opportunities that yield. Not only taking local economies into account, they also look for additional revenue generators such as proximity to highways, malls and other economic infrastructure.
Calton continued: “At Carlton James we understand that crisis and opportunity are just opposite faces of the same coin. The key to investing successfully is diversification, so if things are unravelling in Europe, make sure you have a stake in the US.
“Because we have pursued a policy of diversification, and built clear exit strategies into all our opportunities to mitigate risk, we can offer a real alternative during these uncertain times.
“And in spite of uncertainty in the wider economy, real estate remains a solid investment. Even in the UK, the gloomiest predictions about loss of property value pale in comparison to the loss of value on the FTSE 100 and 250 following the vote to leave the EU. And with real estate experts predicting Brexit could drive demand for US real estate, now would be the time to invest and get ahead of the crowd.”