The View from Berkeley Square – The Property Chronicle
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The View from Berkeley Square UK trading businesses are suffering the effects of economic and political uncertainty

Investor's Notebook

The Global Real Estate Sector has shown a Total Return of +7% YTD for a Sterling investor, compared to -1% for UK Real Estate Sector, or +2% for the FTSE All Share. The major contributor at the time of writing has been the US Real Estate Sector (+11% TR YTD) helped by a strong US dollar and a solid performance from the US REITs in spite of rising interest rates. One of the stand-outs has been the recovery of US mall stocks, benefitting from the Supreme Court ruling in June on the ability of individual States to raise Sales Taxes from on-line retailers even if there is no physical warehouse presence in the State where the goods have been purchased – a very interesting ruling.

Eurozone Real Estate (+6% TR YTD) has also been good to a Sterling investor, helped by a flatter than expected yield curve which has supported the German residential stocks, but there have also been some stand-out performances from Scandi and Spanish stocks. A flat yield curve in Europe is understandable given some disappointment in economic growth (and on-going political instability in Italy), but this looks paradoxical in the US currently benefitting from a strong economy, tax cuts, and near full-employment. The debate is ongoing as to whether this is the deflationary impact of new technology, the growing threat of trade wars or profound changes in labour markets, but to have strong economic growth combined with a low and flat yield curve is a happy combination for US real estate – but then we do have a property developer in the White House! The disruptive tweets may well continue until at least the Mid-Term Elections, but I find it hard to be fully invested in such an extended (8th or 9th innings!) US real estate cycle.

Investor's Notebook

About Robert Fowlds

Robert Fowlds

Robert Fowlds retired from investment banking in 2015 as Head of Real Estate Investment Banking for JP Morgan Cazenove. In 10 years Robert led or co-led around 60 public market transactions including IPOs, equity raises and M&A. Prior to corporate finance, Robert was Co-Head of Real Estate Equity Research at Merrill Lynch, and previously Kleinwort Benson, where his team was #1 ranked in the Extel and Institutional Investor Surveys for 11 years. Robert's early career was as a chartered surveyor.

Articles by Robert Fowlds

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