On Friday 24 June 2016, the result of the EU referendum was announced and the world woke up to the news that the UK would be leaving the EU.
Brexit – a term shorted from ‘British exit’ – has dominated global headlines however, almost a week on since the shock leave announcement, the markets have started a slow recovery.
As of today, the FTSE 100 share index is up 2.1% – almost back to levels recorded before Brexit – and the pound has increased by 0.3% against the dollar to $1.33383 however, sterling remains low when compared to the levels reached before the referendum.
While domicile investors and house buyers sit back with a ‘wait and see’ attitude, overseas buyers are snapping up the chance to purchase UK property at a discounted price.
With the pound at a 31-year low, international demand for property investment in the UK could rise to unprecedented levels.
According to the Juwai Brexit Survey, 46% of respondents believed that Chinese buyer demand would increase if Britain exited the EU.
Weaker pound attracts overseas investment
Brexit presents overseas buyers with a unique opportunity to capitalise on the UK’s property market while the value of the pound has dropped.
Overseas buyers can save – based on today’s market – around 10% on their purchase and will benefit from future rises in the value of sterling.
“Chinese buyers are much more likely to take note of property prices, exchange rates, available inventory and economic conditions than the simple fact of Brexit, however,” Charles Pittar, CEO of Juwai, a Chinese international property portal told Forbes.
“It remains to be seen if the UK will lose any of its reputation as a trusted location for long-term property investment, but I’m inclined to think it won’t,” Pittar added.
The favourable exchange rate will no doubt be a positive factor which will continue to drive the strength of the UK’s property market.
What the experts think…
The experts at property firm Knight Frank expect to witness strong demand for UK property from Singapore, Hong Kong and China.
Dr Megan Walters Jones Lang LaSalle’s Head of Research, Asia Pacific Capital Markets, agrees that sentiment will grow among overseas property investors.
“Overall, there remains a large volume of Asian capital waiting to be deployed, including into Europe […] A fall in the value of Sterling against Asian currencies, will provide an entry point into the UK for overseas investors; market that is the world’s fifth largest economy, and second to Germany in Europe.”
As the future of the UK within the EU is hotly debated, one thing seems to remain a certain – property investment will continue to attract overseas interest despite Brexit.