Investment management business Kames Capital believes regional property markets around the UK currently offer potentially better opportunities than those in London, with Brexit likely to hit the capital harder than anywhere else in the UK.

David Wise, investment director of Kames’ property team and manager of the £435m Kames Property Income Fund, says that while he does not expect returns in London to plummet due to the impact of the EU referendum, Brexit does pose a risk to the city’s outlook in the short-to-medium term. As such, he says better property returns will be found elsewhere for at least 12 months, and possibly longer.

“At present, regional markets are showing no signs of slowing,” he says. “Tenants are signing new leases and paying modestly higher rents, and even if this were to change, we are better insulated than competitors as we don’t need to be seeing rental growth to deliver attractive returns.”

Wise points out regional markets are much less exposed to Brexit, and historically less volatile, offering a more attractive return profile than London in current market conditions.

“London is the big risk when it comes to Brexit, although it was already a long way through its rental cycle and was probably due a slowdown anyway,” says Wise. “The depreciation of Sterling has and will underpin the London market so returns will not fall off a cliff, but it will likely be a market that it is better to be out of for the next year to 18 months.”