Brexit
Jun 28, 2016
Last week Britain’s surprising exit from the EU sent shockwaves around the world and have resulted in a major destabilisation in Europe. The potential repercussions of an event such as this is a longer conversation for another day, however it is interesting to take a more local view on the result. A global event like the Brexit can and will have a direct effect on New Zealand markets, primarily driven by a lowering in global confidence and uncertainty surrounding how the exit will play out and the unknowns involved. In a time of record commercial property yields and surging prices, it pays to take stock of the fact that New Zealand and particularly Auckland is a very small market on a world scale. Most global events, even those far outside of our control can have an effect on the risk associated with markets in New Zealand, including the commercial property market. Overseas, a flight to safety has been witnessed, with gold prices increasing and Treasury Bonds yields decreasing. The major question for local property investors should be: Have I appraised the risk of my commercial property investments correctly in terms of yield on their purchase price or selling price? Also do you view commercial property as a comparatively low risk investment? (which has not historically been the case) or a safe haven.
The full effect of the Brexit will not be known for some time. The only thing we know for certain is that no-one knows anything for certain. Like everyone else, we will be watching closely at what unfolds over the coming months…
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