Investors from all around the world are sensing an opportunity as the UK pushes for its exit from the European Union.
But even as the UK grapples with the idea of exiting from the EU, foreign investors have been fishing for investment opportunities in the kingdom’s dwindling real estate sector, thanks to the weak pound. Smart investors are looking to cash in on the huge Brexit bargains, especially high net worth investors from the US and Hong Kong.
“We’ve seen a huge influx of enquiries and an increase in super and prime London deals being done from Hong Kong and China,” the head of international residential for Savills Mark Elliott was heard saying.
In its recent research, Savills discovered that a buyer who would pay £5 million for a UK property in 2014 when the market was at its best would pay for the same property today at a discounted price of £3.3 million. Quick math reveals that property prices in the UK may have dropped by as high as 33%, mostly occasioned by a stronger US dollar, to which Hong Kong’s dollar is also pegged to.
“We have seen a huge influx of enquiries and an increase in super and prime London deals being done from Hong Kong and China,” said Prime Minister Boris Johnson in a recent press release.
But it doesn’t end at that, other industry players claim even larger price cuts.
“The current status of the pound means that for dollar-denominated buyers, prime London property is about 40 percent cheaper than it was in 2014,” Katherine O’Shea from Coutts Real Estate Investment Service said.
Properties with a price range of between £1 million and £10 million are categorized as being Prime. Those that exceed that price range are Super-Prime.
Now, while Prime properties are currently priced at discounted rates compared to figures from five years, experts say that the prices could dip even further. An initial price drop prediction by the Bank of England evaluated a worst-case scenario of a 35% discount. Well, such an extreme may be unlikely, but from the looks of it, no one can outrightly rule out the possibility of a further price drop, especially against the dollar.