All it took for the market was a few hours to plummet down by several hundred points. This is one of the worst fall market has ever taken in the last few years. A multitude of sectors were deeply affected by the downfall and the real estate sector in UK wasn’t left untouched. Real estate stocks joined Monday’s sell-off frenzy. Commercial and residential properties are in ‘bubble territory’, if Jeffries are to be believed. The reason for such a situation is a combination of loose money, low inflation and huge amount of cheap credit. As per Taher Suterwalla, it would be recommended selling off British Land and Hammerson stocks. Cash would regain its value once the rates increase, but as of now, global liquidity is slowing down.
British Land is down by 5.4 % and Hammerson fell by 4.3%. The daily blue chip volume was up by three times, all indicating high sell off. The situation was worsened by the drop in oil and mining stock prices. Glencore dropped by 13%, BHP Billiton decreased by 9.2%. A major reason for his is also the devaluation of Chinese currency. It has had a macro impact on the market.
Brent crude oil took a plunge to reach below $45, lowest since 2009.
Taher Suterwalla thinks that after oil price and China stock market, London real estate will be the next bubble to burst. As per him, properties had become exorbitantly expensive. It isn’t long before the bubble will burst and prices will be down. But investors and consumers should make the most of this fleeting option as for a city like London will be expensive in no time. Those who would be investing during this time would earn great rewards.