Real Estate Seen Hurt by Brexit Unease of Wait Now, Invest Later

  • People have ‘frozen some of their plans,’ PGIM’s Hyat says
  • Hyat sees opportunity in U.S. high yield, excluding energy

U.K. commercial property is among markets being squeezed as uncertainty grips would-be investors after the country’s Brexit vote, according to Taimur Hyat, chief strategy officer for Prudential Financial Inc.’s $1 trillion asset-management arm.

“I would characterize the market sentiment as being one of ‘let’s wait’ rather than ‘let’s invest,’” Hyat said Monday in an interview on Bloomberg Television. “And we see a softening, particularly in real estate markets, because of that."

Global firms with substantial London operations are considering shifting staff to other nations on concerns that British Prime Minister Theresa May will be unable to strike a post-Brexit deal that preserves the right to sell goods and services freely around the European Union. While the actions of policymakers and regulators helped calm global markets after the turmoil following the U.K. vote in June to leave the EU, many investors remain wary of committing large sums of capital, according to Hyat.

“We certainly see that people have frozen some of their plans,” Hyat said. Prudential’s PGIM asset manager oversees money for clients including more than half of the top 300 global pension funds, according to its website.

‘First Step’

Hyat said there are opportunities in U.S. high-yield bonds outside of the commodities and energy industries. He also recommends emerging-market debt and “the higher end of structured products in the fixed-income world.” But he cautioned against overly optimistic expectations for investments in an era of near-record low interest rates.

“The first step we suggest is realism around where rates will be,” he said. “Not just tomorrow and the day after, but for the long-term."

Newark, New Jersey-based Prudential Financial is a competitor of Prudential Plc, the U.K.’s largest insurer. Hyat’s company rebranded its investment-management arm this year as PGIM.

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