Impact of Brexit on U.K. Investments: Q&A with Conrad Family Office’s Brian West
Brian West, Conrad Family Office
Sept 20. 2019 Family offices and institutional investors navigate a plethora of risks on a daily basis but political uncertainty is, perhaps, one of the biggest challenges.
The United Kingdom’s decision to leave the European Union in 2016 was widely unanticipated and three years later there is still no concrete direction. However, London-based Conrad Family Office, an independent multi-family office, remains optimistic about the country’s prospects as a great place to invest and do business.
We spoke with Brian West, private client manager, to learn more about Conrad’s outlook and dig to the roots of its optimism:
How has the uncertainty about Brexit impacted the U.K.’s appeal as an investment destination?
Just a few years ago, Belgium had a period of nearly two years without a government, a period which saw the Belgian economy outpacing growth in both neighboring Germany and the wider euro zone.
Perhaps there is a parallel to be drawn here with the current Brexit uncertainty and political paralysis in Westminster – after all the U.K. economy outperformed Italy, France and Germany last year.
It seems that whilst our politicians engage in a prolonged spell of self-induced navel gazing the rest of the U.K. population just cracks on without undue interference from the inhabitants of Westminster who, in so many cases, have no hands-on business experience anyway.
Consequently, the economy continues to defy all expectations and outperform our EU neighbors just as the European Central Bank resumes quantitative easing in a bid to boost the ailing euro zone economy.
Britain remains strong and London, perhaps now more than ever in recent years, continues to demonstrate its legendary resilience in the face of adversity. It simply never loses its appeal.
Has the uncertain economic climate created new opportunities for investors such as yourself?
In February, Sonal Thakrar, partner and head of residential property at leading London law firm Mishcon de Reya stated that: “Brexit is creating huge uncertainty, but it’s also a fantastic chance for those who are savvy and brave enough to buy something to keep.”
She was talking about a steady flow of high-end London property transactions that Mishcon is handling where buyers are securing very substantial discounts on the original asking price.
Property lending, management and advice is at the core of the Conrad proposition and for every purchaser we see that is put off by Brexit there is at least another who is encouraged to look for a bargain, anxious to close transactions before vendors have a chance to change their minds.
Uncertain economic conditions always create new opportunities for those that have the foresight and courage to seize them.
Has the turmoil over the past three years changed your investment thesis or allocation strategy in any way? Have you considered other European destinations for investment or operations since the vote?
What turmoil? The recession that was so widely predicted in the wake of the 2016 vote never materialized – quite the reverse in fact with the U.K. economy growing strongly.
At Conrad our investment strategy is based strongly upon London real estate and as far as we are aware London hasn’t moved. It’s still uniquely placed geographically in the world, it still has the English language, legal system and land registry, it retains some of the world’s best schools and universities, it’s an incredibly diverse, vibrant and welcoming city and the ever-changing London skyline is testament to the power and appeal of the City and further east Canary Wharf as a world leading financial services center. Yes, we work closely with other European jurisdictions, but only on the basis that they use our services to invest in the U.K. and particularly in London.
What advice would you offer foreign investors (family offices) who are interested in entering the U.K. market now?
Exactly what we said earlier. At a point of maximum uncertainty surrounding Brexit, now may just be a great time to enter the British market. It’s not for the faint hearted and many of our investors rely heavily on us to be their “eyes and ears” in London but with the right advice there is undoubtedly a great opportunity.
Let’s imagine that in the coming weeks that U.K. politicians and EU officials finally get the withdrawal agreement signed off, a significant degree of confidence will return to the market and property prices in London could gradually start to rise. By contrast, if they fail and Britain exits without a deal, sterling will almost certainly weaken significantly, making London and U.K. property look even cheaper to overseas investors, fuelling their demand and very possibly prices could gradually start to rise. From a London property perspective, we may just be looking at the classic “win-win scenario.”
Whatever happens there will be great opportunities for foreign investors.