If Brexit were a dog in the eyes of real estate investors, it would likely be a Chihuahua. Loud and menacing, but ultimately not very scary. Despite some experts predicting doom and gloom for the UKâs property market since the results of Juneâs referendum vote became official, property investors and developers from Asia remained confident.
Chinese developer Greenland Group released plans to build the largest residential tower in Western Europe late last year. Since then, sales at The Spire have been brisk with the mainland firm having raked in more than GBP 260 million between October and December of 2016. And itâs easy to see why the project has been a success.
Property consultancy JLL pointed out that London suffers from perpetual housing undersupply that shows no signs of abating. Demand for London housing is also set to increase in the coming years as London-based companies continue to add new jobs bringing more people to the city.
âOne of the key factors to consider as a residential investor is that London has an undersupply of housing that is unlikely to be resolved any time soon,â David Green-Morgan, Global Research Director, JLL, said. âUK government figures show that there will be a significant annual shortfall between supply and the forecast 42,000 housing units needed each year for the next four years. With no short-term solution to this predicament, there is a natural floor under any significant downturn in pricing.â
Brexit negotiations to determine impact
This isnât to say London real estate investments are a sure bet. Research from CBRE points out that real estate investments continue to take place amid the uncertainty of continuing political and economic uncertainly. Even with those dark clouds hanging over the UK market, property is less likely to be affected.
âThere is certainly some cause for optimism when we look ahead to next year with property expected to perform despite ongoing uncertainty. 2017 wonât be without its challenges and while the market will without doubt require informed and precise navigation, we are confident that investor appetite for UK property will remain strong, particularly from overseas,â Ciaran Bird, UK Managing Director, CBRE UK stated. âHousing and newer asset classes such as healthcare and student accommodation will become more prominent on investorsâ wish lists.â
One thing to keep an eye on will be the on-going Brexit negotiations. Green-Morgan explained that the property outlook would remain positive unless discussions become too acrimonious and go beyond the proposed two-year timetable. He concluded that a âhard Brexitâ may negatively impact the market, but even then things arenât likely be too bad.
