UK developers at Cityscape hope lower pound will restore interest after Brexit vote
British property developers will be hoping the weak pound will attract investment into the sector as the Cityscape Global exhibition gets under way.
More than a dozen property brokers and developers from the UK have taken space at the Dubai property show this year, including new entrants Stanhope, which is marketing the former Television Centre building in Shepherd’s Bush, and Dalian Wanda, which is marketing the massive One Nine Elms towers in Vauxhall, alongside Cityscape stalwarts such as Taylor Wimpey.
Following Britain’s surprise referendum result to leave the European Union in June, the value of the UK pound has tumbled more than 10 per cent, making it much cheaper for Arabian Gulf investors to buy UK property.
“We’re really excited to introduce our product in person to the GCC market for the first time at Cityscape,” said Peter Allen, the head of sales and marketing at Stanhope. “We’ve definitely seen a recent spike in inquiries from GCC buyers.”
“In real terms, our scheme is 10 per cent better value today than it was before the Brexit vote – so there is a clear opportunity for GCC investors to capitalise on this fact,” he adds.
Mr Allen’s eagerness to appeal to Gulf investors is especially understandable given the dismal post-Brexit outlook for domestic buyers.
According to the Bank of England, the number of mortgage approvals slumped to an 18-month low in July and the Royal Institute of Chartered Surveyors said that its members were reporting a drop in the number of inquiries from new buyers.
Investors worry that Brexit could also lead to house price declines as banks and other companies move their European headquarters away from London, taking jobs with them.
But so far brokers say that many of the GCC investors they have been targeting are waiting to see if prices fall lower before they commit to buying.
In the most exclusive London neighbourhoods, often frequented by GCC investors, brokers report that prices are already falling.
According to Knight Frank average prices in the London district of Knightsbridge fell 7.3 per cent in the year to the end of July. Prices in Chelsea were down 7.2 per cent, South Kensington prices fell 5.7 per cent and Mayfair prices dropped 0.8 per cent.
“Overall, since the Brexit vote we have seen sales fall by between 25 and 30 per cent,” said Jonathan Hewlett, the head of London residential for Savills. “The discounts we have seen have ranged from zero to 10 per cent.”
“There is definitely an element of investors waiting to see if prices fall further before taking the plunge. It really depends whether people are buying for an investment or to live in themselves. We’ve had a couple of wealthy GCC investors who have said to us ‘yes, go ahead, I want this house to live in and I’m never going to get a better moment to buy it’. But one-off investors are tending to hold off because it’s less of an emotional decision.”
“In the aftermath of Brexit there was complete shock and dismay for three weeks, but since then we are slowly seeing confidence coming back into the market. It has been holiday season and so lots of people have disappeared,” he adds.
According to Dubai’s propertyfinder.ae, traffic to the website from the UK fell 8 per cent in the immediate aftermath of the Brexit decision.
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Published: September 5, 2016 04:00 AM