Albeit the Brexit is causing enough problems already, the first of potentially many repercussions is becoming visible. The commercial property market is suffering from a significant aftershock; several big asset management firms have halted trading. This brings the total to seven funds taking similar action.
Keeping Commercial Property Investments Locked Up
To put this news into perspective, there are different angles to look at it. First of all, over half of the UK commercial property investment products are being frozen. Unloading these funds is rather difficult, due to their exposure to prime commercial property and offices across the UK. For investors who have money tied up in these products, there is very little they can do.
If that was not bad enough, Aberdeen Fund Managers have slashed their fund by 17% as well. To make matters even worse, they halted withdrawals, not allowing investors to pull out their money. While it is understandable the firm doesn’t want investors to regret their decision, locking up their funds will only do more harm than good.
The Brexit is causing a lot of panic among both UK and international investors. Unfortunately, the commercial property investment market cannot provide enough liquidity for investors willing to pull out their funds all at once. While most people focus on the Pound Sterling dropping in value, all other UK markets are being hit as well.
For the longest time, it appeared the commercial property market was paving a road to greatness. Financial experts even referred to this market as ‘unstoppable” not too long ago. The global crisis worked out well for property pricing in the UK, thanks to the influx of foreign money. Alas, it appears the Brexit could very well be the undoing of this potent market shortly. Although it is still too early to tell what the effects could be, a depreciation of the real estate market seems likely. Even residential real estate is showing signs of decline, which is not positive for the UK at all.
The biggest concern is how the handful of funds can tie up over half of the real estate investment market without repercussions. Moreover, they effectively give investors no alternative to move their funds out. Bitcoin, on the other hand, lets investors control their funds at any given time. The time has come to diversify investment portfolios, and Bitcoin is looking stronger than ever
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