London has been the preferred safe-haven for property investors across the globe for decades but with the UK deciding to exit the European Union, Bloomberg noted that Asian real estate markets could benefit. That’s because investors will now be looking for a stable place to buy property given the impending volatility the UK market will be subject to during the next few years.
Despite facing problems including oversupply and high prices, Singapore, Hong Kong and Australia could soon see increased foreign interest in property as investors look for safer markets, experts at CBRE told the website.
“Capital will look for safe havens, countries that offer stability,” Henry Chin, head of research for Asia-Pacific at CBRE, stated. “Mature, developed markets will look attractive again.”
Japan is another Asian market that could benefit from the Brexit. “The world recognises Japan as a safe haven,” Takeshi Akagi, national director at Jones Lang LaSalle, explained to Bloomberg. “Because of that, Asian money that has been looking to invest in Europe will come to Japan. As uncertainties unfold in Europe and spread out to global markets, Japan would, relatively, be considered as a predominant place to be.”
BlackRock pointed out that commercial property values could fall by as much as ten percent during the next 12 months with oversupplied central London likely to be the hardest hit. There is expected to be a decline in tenant demand and overseas investors will probably request a larger risk premium or more compensation for holding UK assets.
Office rents in London could drop by 18 percent within two years of the UK starting the process to remove itself from the EU, Jefferies LLC analyst Mike Prew said. A number of international businesses are likely to move jobs out of the UK and that would see office vacancy rates skyrocket. It was noted that developers had plans to build a significant number of office projects in London during the next four years but may now need to reconsider those plans.
