Uncertainty rather than logic is fuelling worry in the market, but Prime Central London investors in quality will always hold quality property stock.
Brexit has weakened the GBP. Middle Eastern buyers are on the phone using this as a buying opportunity. One of my clients has put aside £25m specifically to invest into two and three bedroom, flats in Prime Central London, which will be rented out for the next five years. It is our task to acquire the property and manage the portfolio and we are in the market looking to buy now as a direct consequence of Brexit. Aside from that, on Friday 23rd June post result, we received a £9m bid in Surrey and are in negotiations on a £5m deal.
Other concerned investors are buying gold and being a little more emotional because it was a divisive non-legally binding vote and we are yet to have a clear road map. It is a big decision for the UK, and ultimately it has thrown up lots of questions. However, it is generally worry based on the uncertainty as opposed to logic. There will be volatility in the financial markets.
The underlining basics of the UK economy mean the volume of property sales may fall, but prices will be underpinned by the strength of the UK economy. Bear in mind, London has softened for non-prime areas such as Vauxhall, Nine Elms, but investors in quality will always hold quality. Lawyers will be making a lot of money and hedge funds made a fortune over the last few weeks; and I am positive some of them will want to upgrade their life styles, committing to buying expensive homes in prime locations.
The world will not stop, but there could be some worry over the coming few months, and long term investors are ready to take full advantage! At the end of the day, Knightsbridge, Wentworth, Belgravia, Mayfair are all limited in size and throughout history the wealthy have always wanted a home in these prime pockets. The wealthy have not really wanted to venture out to Vauxhall or Nine Elms.
I envisage that housing stock will become more valuable as their numbers are not expanding; in the past, developers have largely built flats and not houses in the key super prime areas. Not everybody wants to live in a flat, so terraced houses could be in the line for some good price growth.
We could see prices rise with inflation and if interest rates are lowered. Equally, if the GBP weakens too much, interest rates may rise to sure up the GBP and this would add more cost to the housing market. The GBP is currently at 1.34 to the USD. Personally, I see the next three months as a huge opportunity, thought through carefully with sound logic to support a position.
Assets which support basis human needs will be in huge demand (water, electric, sewerage, communications and so forth; therefore I don’t believe Data centres or Thames Water’s Head office etc will fall in value. I actually believe that they will become more in demand from pension funds and investors; investment funds have to invest, or they will be out of business.
Managing Director and founder of Hanover Private Office, Alex Newall is recognised as one of the UK’s top real estate advisors in London and has some of the world’s most affluent individuals as clients.
Harrow educated Newall has transacted in excess of £1billion worth of client assets and currently advises on a further £2 billion of real estate across Europe.