Boris Johnson's UK Election Win: Short-term boost for real estate but questions remain

Within 20 minutes of the release of the exit poll showing Conservative Prime Minister Boris Johnson heading for a comfortable majority, at 10pm GMT, the pound hit a 12-month high. Financial markets are euphoric about the victory of the pro-business Conservative Party and an end to the first phase of the UK's Brexit drama. Investors and advisors predicted this election result will mark the beginning of a UK investment surge, as both international capital and domestic money kept pent up by uncertainty about Brexit now chases UK yields and property market liquidity. The UK’s commerical real estate market is anticipating a short-term improvement in sentiment and investment activity after the Conservative Party won an overwhelming majority in the general election, but many fund managers remain concerned about the prospects beyond 2020. “A Tory majority is the most positive or benign outcome for business and the real estate market,” said Rob Wilkinson, CEO of AEW. “But I don’t think this is going to lead to any sudden euphoria or an investment spree into the UK. Critical uncertainties will still remain, particularly around whether they can get Brexit done by 31 January and a deal struck by the end of next year.” James Thornton, CEO of Mayfair Capital, agreed: “The resounding Conservative win removes the short-term risk of a no-deal Brexit and the fog of political uncertainty – although the medium-term risk of the UK crashing out of the EU remains.” Zachary Gauge, European real estate analyst at UBS-AM Real Estate and Private Markets, said: ”The comprehensive majority won by the Conservatives should finally give the UK real estate market some clarity. “Investment activity in 2019 has been held back by the ongoing uncertainty, but we would expect to see some of the foreign capital which had been understandably waiting on the sidelines to start to target the UK again in the first half of 2020."