However, the reaction in the value of sterling could not have been more different to that following the Brexit referendum last year.

While the outcome of the referendum caused the value of the pound to plummet, following the election announcement in mid-April, it reached a five-month high of $1.2729. Market commentators, such as AJ Bell investment director Russ Mould, believed that a boost to real estate investment trusts and real estate investment services sectors is likely to follow. 
  
As Mould stated: “There is a risk that a sudden jump in sterling dampens overseas interest in British assets, but the UK still offers a rule of law and an independent central bank, while a strong – or at least more stable – currency could reaffirm the long-term appeal of UK commercial property to potential buyers.”

Despite these apparent positives, the rise in the value of the pound has caused some pressure to build on the stock market. In a newspaper interview, Architas investment director Adrian Lowcock commented: “Given that the FTSE 100 is trading close to all-time highs and we are seeing an increase in geo-political uncertainty, investors should prepare for increased volatility over the coming weeks and hold a diversified portfolio of equities and bonds as well as property and gold. Having some cash set aside at times of uncertainty will give investors the flexibility to act as more information becomes known.”

While some analysts believe that political events can be largely disregarded when building investment portfolios, it seems likely that many investors will now become increasingly attracted to safer assets, or at the very least diversify their portfolios. 

Justin Urquhart Stewart, co-founder of Seven Investment Management, stated: “For investors, the course of this election will only underline the need for broad diversification across asset classes and currencies. Good investment is about managing the risks of the unexpected, and here is a great example.”

Some argue that the anticipated Tory landslide on 8th June is likely to provide some much-needed political certainty and provide Theresa May with a stronger mandate when conducting her Brexit strategy. Deutsche Bank’s George Saravelos believed that the election announcement was a “game-changer for both the UK’s Brexit negotiations and sterling”.

However, it has been noted in some quarters that a soft Brexit outcome is far from certain as the Tories could end up becoming more hard line towards Brexit if they lose moderate MPs to the Liberal Democrats in the South and win seats from Labour in Eurosceptic constituencies in the North.

Foreign direct investment reached a record high of £110.9bn in the last quarter of 2016, largely thanks to the drop in the value of the pound. Despite recent political uncertainties and fluctuations in sterling, however, in the longer-term it seems likely that investors will continue to place their capital in UK real estate to obtain much-desired certainty.  

Titlesolv is the trading name of London & European Title Insurance Services Ltd authorised and regulated by the Financial Conduct Authority.