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 31-year low. There was pandemonium on currency, equity and oil markets. At around 2100 GMT Friday, sterling was down about 8.8 percent 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 30 percent 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.
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 five percent nationwide and even more in the capital.
Property consultancy Jones Lang LaSalle (JLL) said capital value adjustment could be down up to 10 percent 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 5.6 percent lower than otherwise forecast by 2019, with unemployment rising back above six percent.
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.