SAVILLS BULLISH ON U.K. DESPITE BREXIT
Demand outstripping supply despite Brexit uncertainty, says real estate services provider
PROPERTY investments in the United Kingdom, particularly London, are expected to thrive despite Brexit, says global real estate services provider Savills.
Savills head of world research Yolande Barnes said there would be continued demand for residential and commercial properties in London due to the limited supply.
“We are still uncertain about the impact of Brexit, but London is a big city, and the supply of new properties is tiny compared with the overall number of households,” she told NST Business after the Savills Malaysia Breakfast Forum, themed “Navigating 2018 & Beyond”, here, yesterday.
Barnes said property yields in the UK were still competitive, particularly for commercial properties.
“I don’t see London’s yields as being significantly different from other global cities. It depends on the type of properties and development,” she added.
She said developers should pay attention to demand and supply.
“Anybody looking for future value needs to pay attention to who are coming to the city and how the city is growing, and what kind of wealth is being generated,” she said.
Barnes said the office leasing market in London was encour- aging and expected demand for rentals to be high in the long term.
“As long as people want to live and work in the city, and businesses thrive, people still believe in the long-term future of London. It still has enough pull-factor to attract people into the city, despite Brexit,” she said.
She said many rental properties were nearing completion, which would trigger growth in housing prices.
Savills Southeast Asia chief executive officer Christopher Marriott said the city had become more accessible to more people, creating urban regeneration in a large number of affordable residential areas.
“We see a lot more demand for affordable housing coming into the market. With this regeneration going on, it has been a big boom for the availability of real estate in London,” he said.
Savills Malaysia executive chairman Datuk Christopher Boyd said there were still plenty of opportunities in the UK for foreign developers.
“It is a question of doing proper market research, deciding where the effective economic demand lies, and build for it.
“Maybe the game at the moment is not for most expensive high-rise, but there are many other segments that can be catered to,” he said, adding that Malaysian developers primarily built residential developments in the UK.
He said Malaysian developers’ (SP Setia and Sime Darby Property) involvement in the Battersea Power Station project would a success due to it being well-conceived, designed and built.
“However, the market is cyclical at the moment, and is a bit slow. So it may take a bit longer to recover,” he added.
Axis REIT Managers Bhd head of investment Siva Shanker said Malaysian property developers’ investments overseas would reap better yields.
“As they (developers) grow, they need to look for new horizons. Everybody goes international. If they want to grow bigger and expand their footprint, every company must expand overseas, starting from within the region before expanding outward.”
He said Asean countries such as Vietnam, Thailand and Cambodia had high growth prospects.