Flight from risk hits real estate as well as bonds

It's not just gilt yields which get a safe asset boost.

Via Joe Weisenthal, an interesting research note from French bank Societe Generale [slightly edited for readability]:

Investors are turning to real physical assets like commodities and real estate in London and, it seems, anything that is not euro-related. London real estate and (in our view unjustifiably) the UK has largely continued to hold onto its "safe haven" status. London’s [real estate investment trusts] today trade at a nil discount to net asset value and have almost been accorded "gold status" with 2.0 per cent dividend yield (uncovered for some) where you can get a 6.4 per cent yield from real estate names on the continent (and a 17 per cent discount).

In other words, following similar logic to that outlined by Jonathan Portes, investors are fleeing from risky assets like the stock market, and turning instead to things with a relatively guaranteed base – like real estate.

Most of the attention has been focused on the effect this phenomenon has on Britain's gilts; not only Portes, but also Cormac Hollingsworth at Left Foot Forward, have addressed the fact that it is this flight from risk, not any particular "credibility", which lowers gilt yields. But the flight to safe capital has also skewed some other markets. Weisenthal picks out this chart, comparing the performance of the FTSE 100 to Great Portland Estates, one of the nine British REITs:

The divergence is clear from mid-April onwards. But it's not only REITs which are benefiting. We reported yesterday that house prices are up nationwide, driven largely by rises in London, and there are reports of increasing numbers of Greek and Spanish buyers in the capital. The London real estate market may be borked for some time yet.

The Shard; a symptom of London's booming real-estate market? Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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No, David Cameron’s speech was not “left wing”

Come on, guys.

There is a strange journalistic phenomenon that occurs when a party leader makes a speech. It is a blend of groupthink, relief, utter certainty, and online backslapping. It happened particularly quickly after David Cameron’s speech to Tory party conference today. A few pundits decided that – because he mentioned, like, diversity and social mobility – this was a centre-left speech. A leftwing speech, even. Or at least a clear grab for the liberal centre ground. And so that’s what everyone now believes. The analysis is decided. The commentary is written. Thank God for that.

Really? It’s quite easy, even as one of those nasty, wicked Tories, to mention that you actually don’t much like racism, and point out that you’d quite like poor children to get jobs, without moving onto Labour's "territory". Which normal person is in favour of discriminating against someone on the basis of race, or blocking opportunity on the basis of class? Of course he’s against that. He’s a politician operating in a liberal democracy. And this isn’t Ukip conference.

Looking at the whole package, it was actually quite a rightwing speech. It was a paean to defence – championing drones, protecting Britain from the evils of the world, and getting all excited about “launching the biggest aircraft carriers in our history”.

It was a festival of flagwaving guff about the British “character”, a celebration of shoehorning our history chronologically onto the curriculum, looking towards a “Greater Britain”, asking for more “national pride”. There was even a Bake Off pun.

He also deployed the illiberal device of inculcating a divide-and-rule fear of the “shadow of extremism – hanging over every single one of us”, informing us that children in UK madrassas are having their “heads filled with poison and their hearts filled with hate”, and saying Britain shouldn’t be “overwhelmed” with refugees, before quickly changing the subject to ousting Assad. How unashamedly centrist, of you, Mr Prime Minister.

Benefit cuts and a reduction of tax credits will mean the Prime Minister’s enthusiasm for “equality of opportunity, as opposed to equality of outcome” will be just that – with the outcome pretty bleak for those who end up losing any opportunity that comes with state support. And his excitement about diversity in his cabinet rings a little hollow the day following a tubthumping anti-immigration speech from his Home Secretary.

If this year's Tory conference wins the party votes, it’ll be because of its conservative commitment – not lefty love bombing.

Anoosh Chakelian is deputy web editor at the New Statesman.