Market Pulse – Page 15 – Blue Bricks Magazine

Finance, June 2020, Market Pulse

7 May 2020

Bank of England warns of worst recession on record

Today, the Bank of England has warned that the current pandemic, brought on by Covid-19, will bring about the biggest recession on record. It speculated the economy as a whole will shrink by 14% in 2020 (if lockdown measures are relaxed sometime in June).

Research by the Bank of England shows the economic impact by Covid-19 had been “dramatically reducing jobs and incomes in the UK” during the period.

The policymakers voted to keep interest rates at their record low of 0.1%. There was some disparity between the Monetary Policy Committee (MPC) on whether to increase stimulus into the economy. A total of 22% of the committee voted to increase the latest round of quantitative easing to £300bn.

The Bank of England’s analysis was based on the lockdown measures being phased out gradually from June onwards. Its latest Monetary Policy Report illustrated that the UK economy would enter its first real recession in more than a decade. It shows the economy shrinking by more than 3% in the first 3 months of 2020, with a much sharper decrease in the months from June.

This would cause a recession in the UK due to two consecutive quarters of economic decline.

The Bank commented on the housing market, saying it had effectively come to a standstill. In addition, all consumer spending had dropped by 30% this month.

For the whole year of 2020, the economy is expected to shrink by over 14%. This would be the largest decline on record, according to the Office of National Statistics (ONS).

The economy isn’t expected to return to pre-pandemic conditions until at least the middle of 2021. Governor of the Bank of England, Andrew Bailey, expects any ‘permanent economic damage’ caused by the virus to be relatively minimal. He said the economy was “likely to recover much more rapidly than the pull back from the global financial crisis”.

Nathan Winch

Market Pulse, Property Tips & Tricks, Strategy Talk

4 May 2020

Marketing – love it or hate it?

The idea of having to ‘do’ marketing will either fill you with joy and excitement or with dread and fear. I’m here to simplify it, make it accessible and help you understand why it’s crucial to your business. First let’s agree on what marketing is. For me, it’s simply a conversation, giving yourself the opportunity […]

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Jo Saint

Finance, June 2020, Market Pulse

4 May 2020

I won’t shake hands, if you don’t mind…

It’s been a crazy few weeks hasn’t it? From the sheer panic of what are we going to do if we run out of toilet paper, to a 99 year-old war hero raising, what is by now £29m+, by walking in his garden – from stupid to stupendous. A few weeks ago, you might have […]

Tony Pomphrett

Finance, June 2020, Market Pulse

4 May 2020

COVID-19 and Landlords

As we find ourselves in unfamiliar and uncertain times, many people ask me what the future holds for the property market and how it will be affected by COVID-19. One client in particular who is looking to take his first steps onto the investment property ladder has been firing question after question, in a bid […]

Will Norrington

June 2020, Market Pulse

4 May 2020

Blackstone raises £8bn fund to invest in property

Blackstone Group is the largest alternative investment company in the world. The firm specialises in private equity, credit and hedge fund strategies to generate huge profits for its funds. The company, as of the beginning of April 2020, has finished raising approximately £8,000,000,000 ($10,700,000,000) which will target European-based property investments.

This grows the liquid assets of the firm, specifically earmarked for property investments, to just under £23bn. According to Bloomberg, this is the largest private equity capital raising since the outbreak of the coronavirus pandemic.

“Our scale and reach allow us to put capital to work strategically during this period of elevated volatility… The significant demand for the fund is testament to the confidence our investors have in our ability to deploy strategic long-term capital to assets and businesses across Europe.”

James Seppala, Head of Blackstone Real Estate Europe

It is likely that this fund won’t be directly invested into property-based assets, but rather to acquire property companies or trusts which own significant amounts of commercial property. We see this from Blackstone’s previous investments, such as its acquisition of Dream Global Real Estate Investment Trust which was finalised in December 2019, adding office and industrial property assets in Europe to its varied portfolio of investments. Blackstone’s property portfolio is currently the largest property portfolio in the world.

Like many other landlords, Blackstone has had to communicate with it’s tenants across the world, in an attempt to work with them during the COVID-19 outbreak. In addition, many private equity firms, including Blackstone, have had to help protect the companies in their investment portfolios by providing capital and credit to keep them afloat.

Citing a private equity survey by CIL Management Consultants, only 4% of investors see the current financial climate as an opportunity to buy or enter the market.

Nathan Winch