BREXIT, which is short for “British exit”, is what people use to refer to on the United Kingdom’s exit from the European Union (EU). Reading the definition is simple, but the exit’s effects prove uncertainty among businesses; hence, sparking debates all over the world.
A UK CEO of high-end real estate agency said the market in London is affected, getting a hit because of the people’s decision of waiting for what will happen on the exit. Despite the downsides, Savills UK CEO Mark Ridley said there are still upsides.
“Volume dropped off significantly in the last quarter of last year as we got closer to Brexit day,” Ridley told Trading Day via Your Money. “The hiatus has continued this year, so this quarter will continue to be very slow as people watch and wait.”
However, the investment seems to grow in a sense in London when looking at foreign investors as 70 per cent of investors came from international buyers. Mr Ridley said Koreans and Hong Kong Chinese are a majority of the investors, while the Middle East is the least.
“Over 50 per cent of that is Asian money, so it’s a very significant component,” Mr Ridley said via Your Money. “Middle East is perhaps less at the moment because it is governed by the oil price. When that starts to improve we’ll see more outflows.”
Looking into the future, the question will always float on among other countries—will it affect us? Will it affect even the country on the other side of the map, which is Australia?
Regarding the Australian market, Savills Australia CEO Paul Craig, a part of the incoming cash will eventually end up within the Australian market. He said the market is seen as a strong investment in spite of its current status: shaky.
“Even now we’ve seen a global inflow of capital into Australia,” he said via Your Money.
Also, Mr Craig explained the real estate market in Australia will increase no matter the ending of BREXIT is.
“I think no matter what happens with the outcome, we will see that probably increase even more.” Mr Craig said via Your Money. “There will be a greater interest in Australia because it’s a transparent market, easy to understand and it’s a safe market to invest in.”
The Australian property market currently has the attention of buyers from different countries, such institutional investors from the United States and Europe, and even rich people from Asia. Mr Craig also cited a number of Korean investors looking into the Australian market.
“The asset class such as offices is quite safe, so they will target areas like Canberra where you have government tenants and long leases,” he said via Your Money.
On the other hand, the residential real estate market is currently affected as there is low confidence in it, but Mr Craig said it will eventually recover.
Aside from the property market, the retail sector is also attracting attention from foreign investors.
“Planning restrictions are quite well governed so you don’t have the likelihood of competing centres popping up next to you. That certainly helps our market.” Mr Craig said via Your Money. “Because of the size of our country and difficulty logistically, e-retailing hasn’t had as great an effect it has had in some other markets.”