International investors included high net worth Thais have viewed London as one of the world’s premier residential markets. However, the Brexit votes are now being counted and investors are being forced to reconsider the London residential market as a safe place to purchase property.
“The mainstream residential market is broadly undeterred by the EU referendum, although the risks of leaving the EU are becoming a bigger concern,” Adam Challis, Head of Residential Research at JLL in London, stated. “Buyers are centrally focused economic and job prospects, both of which are expected to experience modest negative impact should British voters wish to leave the European Union.”
Early estimates by both the BBC and the University of East Anglia show that the leave vote is ahead slightly but the full results won’t be known until the end of today. However, JLL believes the result, whatever it may be, will not have too much of a negative impact on the property market.
“International investors will balance uncertainty against the potential currency arbitrage that could open up. London’s role as the world’s de-facto capital city will remain unchallenged and this will continue to support demand for real estate,” Challis added.
A recent survey by Cushman & Wakefield showed that over two-thirds of investors claimed they would invest less in the UK if the exit vote were approved. Some fifty percent of people surveyed have already cut back on investments and this in turn has slowed the UK economy down. Should the UK stay in the EU, a relief bounce is a real possibility leading to a steep increase in activity during the second half of the year.
“The downside market risks are with a Brexit option, but there are also arguments to suggest the UK will adjust relatively quickly to the new reality,” Challis noted. “While institutional structures will undergo quite large changes, the trading relationship with the rest of Europe will remain important to both the UK and the rest of Europe regardless of the outcome.”
Image via openeurope.org.uk
