UK property offers rich pickings even in post-Brexit era

Is post-Brexit a good time to invest in UK property?

Prime real estate sales in London increased 38 per cent in the week after the Brexit referendum compared with the previous week, according to the property consultant Knight Frank. Toby Melville / ReutersShow less

I want to invest in UK property but is now a good time following the fallout from Brexit? I am not British so do not plan to live there. MM, Dubai

Expert 1: Richard Bradstock, Middle East director at IP Global

Although the UK’s decision to leave the EU came as a shock to many, it presents a great real estate buying opportunity for investors.

In the days following Brexit, the pound dropped to levels not seen since 1985, and many listed British companies suffered as share values dropped significantly. However, the FTSE 100 Index has since regained its losses, and pushed even higher, as the appointment of Theresa May as prime minister is welcomed by markets as a sign of stability.

But as the pound remains weak there are advantages for US dollar-pegged investors in the Middle East. For example, those who purchased a £350,000 (Dh1.6 million) property on July 11 would have saved Dh262,300 than if they had made the same purchase on June 23.

Many have already been taking advantage of this buying power. Prime real estate sales in London increased 38 per cent in the week after the referendum compared to the previous week, according to the property consultant Knight Frank. Despite the uncertainty, month-on-month sales were up by 29 per cent.

Coupled with this, the chronic undersupply of housing in Britain is only set to grow. The UK needs 250,000 homes per annum to keep up with demand, while only 156,140 new homes were built in 2015, and this was the highest level since 2007. This pressure should affect rental yields and valuations positively.

As a long-term investment, we are confident in the UK’s status as a tier-one property hot spot, and with the pound at distressed levels, there are obvious opportunities for savvy investors.

Expert 2: Russell Quirk, founder and chief executive of eMoov.co.uk

We’ve seen nothing to suggest that investing in the UK market post-Brexit should be discouraged. In fact, it has been business as usual for us and the strength of the market as a whole is more than apparent.

Any lasting impact will take a while to come to the surface and like the Brexit itself, this could take two maybe three years to come to fruition.

This said, there has been a lot of scaremongering by Brexit doomsayers about the impact on the UK property market and the majority of this has been unsubstantiated. There is a chance that many, upon reading these headlines, may rush to sell now to maximise their property price potential. Ironically it will be this additional stock flooding the market that will bring about a cooling in the average property price, not a vote to leave the EU.

From an investment point of view, Britain is still a safe bet. Yes, the London second-home and buy-to-let market is largely driven by foreign investment, however, we’ve seen this foreign interest drop right off during the past year. Prime central London in particular has been hit hard, with anything over the £1m price tag taking the brunt.

This wasn’t as a result of the Brexit, but rather an over-inflated London market, which along with the UK as a whole, shows no signs of slowing. This provides an opportunity for the high-end investor to secure a London property in one of the capital’s more prestigious boroughs for a much more reasonable price than usual.

Generally speaking, the reason the UK market is so inflated is the overwhelming level of demand. Not just from foreign investors but domestic residents. This shows no signs of slowing, so the future of UK property investment is still a bright one.

It will be interesting to see what movement is reported in the official indexes for June this month. We predict a two-day wobble as the country stood still, followed by the continued upwards trend over the past year or so.

So investing now is probably a smart move as there may be one or two Brexit deals still on the shelf, but on the face of it the market looks set to continue as before and so investing now is still likely to yield a return.

Next question:

With the low oil price, Brexit, low interest rates, economic uncertainty in Japan, the US and China and political tensions elsewhere, how can I protect my wealth in these volatile times? BV, Dubai

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