For­eign in­vestors eye UK prop­erty af­ter Brexit fall­out

Pakistan Observer - - ECONOMY WATCH -

HONG KONG—With prop­erty prices in Bri­tain pre­dicted to plum­met postBrexit, for­eign in­vestors, es­pe­cially in Asia, are al­ready poised for a buy­ing spree.

It is an ironic twist to the shock ref­er­en­dum re­sult - many who opted to leave the Euro­pean Union saw their vote as a de­ter­rent to out­siders look­ing to take ad­van­tage of eco­nomic op­por­tu­ni­ties in Bri­tain.

The af­ter­math of Thurs­day’s vote to leave the EU saw the res­ig­na­tion of Bri­tish Prime Min­is­ter David Cameron and the col­lapse of the pound to a 31year low. There was pan­de­mo­nium on cur­rency, eq­uity and oil mar­kets.

At around 2100 GMT Fri­day, ster­ling was down about 8.8 per cent against the dol­lar com­pared with Thurs­day night, and for­eign ex­change ex­perts pre­dicted more weak­ness ahead.

Prop­erty prices are also ex­pected to take a hit, with re­ports of buy­ers pulling out of trans­ac­tions due to mar­ket un­cer­tainty.

But while there may be a “wait and see” ap­proach for some, am­bi­tious for­eign in­vestors are on the hunt for bar­gains while the ex­change rate is so low.

“Sev­eral of my op­por­tunis­tic in­vestors have said we re­ally ought to think about this se­ri­ously, and to think whether we should take ad­van­tage of this new win­dow in the mar­ket,” said Ni­cholas Brooke, chair­man of pro­fes­sional prop­erty ser­vices for the Royal In­sti­tu­tion of Char­tered Sur­vey­ors.

“Any­one who’s not deal­ing in ster­ling would see an op­por­tu­nity.” Brooke, whose firm plays an ad­vi­sory role for prospec­tive buy­ers, said while many clients re­mained cau­tious, some in Hong Kong and China with “sub­stan­tial” in­vest­ment ca­pa­bil­i­ties had voiced in­ter­est.

London-based in­ter­na­tional prop­erty agent Knight Frank also said for­eign in­vestors would be wary as they as­sessed the full im­pact of the Brexit fall­out, but the drop in the pound would mean their buy­ing power would “in­crease sig­nif­i­cantly”.

In­ter­est would be es­pe­cially strong from China, Hong Kong and Sin­ga­pore - where in­vestors have a long his­tory of buy­ing up prop­erty in Bri­tain, es­pe­cially London, the firm’s Asia-Pa­cific spe­cial­ist Ni­cholas Holt said.

Chi­nese in­ter­na­tional prop­erty por­tal Juwai.com pre­dicted 30pc more con­sumer en­quiries this month than in May.

The his­toric low of the pound against the Sin­ga­pore dol­lar also con­sti­tuted a “fan­tas­tic buy­ing op­por­tu­nity” for in­vestors in the city, added Don­ald Han, ex­ec­u­tive direc­tor of Ch­ester­ton Sin­ga­pore, a con­sul­tancy spe­cial­is­ing in UK prop­erty. ‘Whole­hearted em­brace’ Asian in­vestors have long sought out both com­mer­cial and res­i­den­tial UK prop­erty off the back of po­ten­tial for cap­i­tal growth and a re­silient econ­omy.

London house prices are some of the most ex­pen­sive in the world and have been on the rise over the past six years.

But in the wake of the Brexit vote, in­ter­na­tional con­sul­tancy KPMG has forecast house prices could fall 5pc na­tion­wide and even more in the cap­i­tal.

Prop­erty con­sul­tancy Jones Lang LaSalle (JLL) said cap­i­tal value ad­just­ment could be down up to 10pc in the next two years.

The In­ter­na­tional Mone­tary Fund has warned that the Bri­tish econ­omy could sink into re­ces­sion next year and over­all eco­nomic out­put would be 5.6pc lower than oth­er­wise forecast by 2019, with un­em­ploy­ment ris­ing back above 6pc. How­ever, the Brexit camp ar­gues that the busi­ness world will adapt quickly with Bri­tain’s flex­i­ble and dy­namic econ­omy buoyed by new eco­nomic part­ners and se­lec­tive im­mi­gra­tion. “The UK’s de­ci­sion to leave the EU is an his­toric event and we should em­brace this whole­heart­edly,” said Robin Pater­son, joint chair­man of UK Sotheby’s In­ter­na­tional Re­alty. He pre­dicted in­creased in­vest­ment from from Asia as well as the US.

Be­sides es­tab­lished in­vestors into Bri­tain, some ar­eas might see new blood join the fray.

JLL pre­dicts more buy­ers from In­dia, which is al­ready an es­tab­lished source of prop­erty in­vest­ment into Bri­tain.

“It is very likely that many more In­di­ans will seek to in­vest there,” said Anuj Puri, JLL chair­man and coun­try head for In­dia.—AFP

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