After the surprise result of the referendum in the UK to leave the European Union back in June, now commonly referred to as Brexit, there have been many articles and opinions on the effects on the domestic property market, both in the short term and in the longer term especially after Article 50 is triggered.
As an international property agency with offices across London, here in the UAE and
also in Asia we can examine the effects in several directions.
Firstly, what is happening in the UK? We are witnessing the following on the ground in London. Prime Central London prices have come down a little but this can easily be skewed by a few highly priced properties adjusting their prices downward to be more competitive. Our offices that sell property in zones 2, 3 and 4 all report prices are ‘much the same’. We are witnessing investors trying to buy cheaply and making low offers but, in the main, sellers are holding fairly firm as borrowing is cheap and rental demand is still strong. This ‘standoff’ has slowed things a little in the domestic investment market. Owner-occupiers are still buying though and actually in greater numbers since the interest rate reduction. I have just returned from a trip to London and witnessed this interest in completed property.
Back in Abu Dhabi we are seeing more and more people with no links to the UK interested in buying investment property there. Some of these clients were looking last summer and didn’t commit but are now looking at prices some 16 per cent cheaper on average purely based upon the dirham/sterling exchange rate. London in particular is such a strong and deep market that – whatever does or doesn’t happen in the short term due to Brexit – it always appreciates in the longer term. Prices in London double every ten years on average.
What about in the UAE? We have a number of sellers here in Abu Dhabi who plan to change their proceeds into sterling. The local sales market has been slow for some months and we now have a number of cases where these sellers have reduced their price to woo a buyer away from competing properties and as a result have now sold the property and because of the devaluation of sterling have actually ended up with more ‘pounds in their pocket’ than they would have had prior to the Brexit vote – even at the lower price.
So, it is a good opportunity for anybody with plans to change into sterling to have a competitive edge. Interestingly, this is making sales happen and starting to stir up the UAE market.
There have been many overpriced properties sitting unsold but with some reductions we are now seeing properties selling and other sellers deciding to take action and either remove their properties from the market or to reduce and let us remarket, as there actually are lots of buyers out there – at the right price.