The plunge in sterling following the UK’s decision to leave the EU has prompted a flurry of interest in luxury homes in London from overseas buyers, who stand to save about 10% of the cost of buying a £1m property, a property consultancy has claimed.
Arcadis said its clients had reported “a bounce in inquiries” since the referendum, with investors keen to make the most of the favourable exchange rate. The firm’s head of commercial development, Mark Cleverly, said that family offices, which represent wealthy clients, had also been “pretty active” in the market.
Sterling started to slide as the result of the poll began to emerge, having risen above $1.50 on 23 June on expectations of a vote to remain in the EU.
On Wednesday, it briefly fell below $1.28 before recovering slightly, but it remains at levels not seen since 1985.
The fall in the value of the pound meant that a buyer converting their money from the Chinese yuan was on Tuesday able to buy a £1m property for £112,245 less than before the vote, Cleverly said. Someone buying from the US could effectively save £102,740, or 11%.
He said an influx of foreign investment would provide a timely boost for the UK construction sector. Since the leave vote, two clients building residential projects – one of them outside London – had put plans on ice, he said, while another developing a commercial project had paused work.
He said some developers may be suspending work while they wait to see if construction costs fall. However, there could be concerns about property valuations, he added.
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Cleverly said the medium term offered a good buying opportunity for some.
“The market volatility we’ve seen as a result of the Brexit vote is, perhaps ironically, going to re-open the luxury property market to overseas investors, as several of our clients have already reported a bounce in enquiries following the referendum,” he said.
“For a market that, in some areas, has been stuttering for some time due to ongoing stamp duty hikes taking the steam out of buyer demand, the buying opportunity presented by recent events could be a big plus.
“More buyers means a more buoyant market, which can only be good news for the industry.”
Earlier this week, London estate agency Douglas & Gordon said that, since the vote, they had seen interest from homebuyers in a wide range of countries, including Nigeria and China, all of whom were buying in US dollars. Most were interested in property priced between £1m and £2m.
SOURCE: The Guardian
