Nery Alaev writes about Brexit’s potential impact on real estate.
This week I’ve decided to look into the global attitudes of real estate professionals and outlets regarding the prospective exit of the United Kingdom from the European Union.
My research into attitudes across the world has found that there are conflicting views about the severity of the Brexit on real estate prices and futures if it is to occur.
Stalling either way
A recent Bloomberg article points towards a stall for property prices in the United Kingdom regardless of the Brexit campaign – Adrian Benedict of real estate firm Fidelity International Ltd. says:
“The U.K. commercial property market has seen unprecedented growth in transactional volumes over the last five years which has led in part to a sustained rise in prices.
The pace of price rises was always expected to slow and it is coincidental the slowdown has come at the same time as the EU referendum vote.”
While there is an assertion in the article that the slowdown in growth is coincidental, there is still belief among other experts cited that the UK leaving the EU will cause demand for office space to fall.
It’s obvious that the UK’s property market faces implications – what about rest of the world however?
A Reuters interview with an outspoken hedge fund manager indicates that there may be a potential safe-haven in some European assets from the Brexit – specifically German real estate.
This is positive for Germany, but it’s a comparatively strong economy when compared to many European peers, even economically large peers such as France and Spain. With this in mind, a ‘leave’ vote will likely be a mostly negative event for Europe’s collective economies.
A bite of the Big Apple
According to an article published by The Real Deal, real estate in the US metropolis New York City could benefit from a movement of capital from London if a ‘leave’ vote occurs.
In the article, experts and professionals on the frontline of New York real estate point towards the city as being a ‘safe harbour’ for investors fleeing uncertainty in the United Kingdom.
Caution from the Gulf
As for wealthy Arab investors from Qatar, Kuwait, the UAE and so on, it seems that a ‘leave’ vote isn’t necessarily a positive one, according to a piece in Nigerian outlet Pulse.
A professional close to the investors that have invested heavily in the UK, especially London, states that:
„Sovereign wealth funds are concerned that Brexit is taking its toll on the property market in London, the situation will further deteriorate if there’s a Brexit vote.“
From this, it’s clear that some London-centric Gulf investors are wary of the vote and will not react positively to a vote to leave.
Scepticism in the Far East
Even as far away as Malaysia, there are opinions circulating about the Brexit’s impact – this is shown by a recent article that details one economist’s thoughts about a Brexit vote negatively effecting Malaysian investments in the UK.
Another article shows that a major Malaysian investment in the Battersea Park Power Station may be effected. From this, it’s obvious that the vote has wide-reaching implications for many different nations.
Will this news affect British peoples’ vote? It’s unlikely – most arguments are driven by immigration and sovereignty as opposed to real estate prices.
No matter what, the world will soon have to deal with a post-vote Britain – whether the UK is in or out, nothing will be the same.
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.