Growing uncertainty regarding the political and economic stability of the country is fuelling concerns that London’s sky-high property prices are heading for a fall.
According to a recent statement released by Societe Generale analysts, UK commercial property values could decrease by more than 25%.
Despite the previously held belief that Brexit would dissuade foreign investment, interest has peaked due to favourable exchange rates.
Peter Wetherell, from London estate agents Wetherell said:
“Many potential buyers had been putting off their decision and waiting for the referendum result to see how the land lies.
“But now we have the result and a large number of buyers are back asking about properties to purchase.”
The combination of London’s status as a financial hub and the weaker pound has made London property an attractive proposition for foreign investors, with investment up by 50% according to Select Property Group.
Anticipating economic turmoil in the wake of the Brexit vote, it seems global investors are on the hunt for property bargains.
The UK property market took an instant blow from the nation’s decision to leave the European Union, with major property funds suspending their trading to stop investors withdrawing their money - resulting in a property fund freeze.
A major source
However, a UK property fund recently sold a central London building for almost 20% less than its pre-referendum valuation, according to the Wall Street Journal.
And some properties are already on the market, with Henderson and Global selling two office buildings and Legal & General Investment Management and Standard life each with an office on the market.
Richard Divall, head of cross-border capital markets in Europe at Colliers International says that global investors may be disappointed with that
However, this is not deterring private equity firms and hedge funds, who have a reputation of trying to buy buildings in times of crisis.
Chief Economist of Emirates NBD, Tim Fox said: “GCC investments into the UK may begin to look much more attractive considering the exceptionally weak sterling levels that might be seen, representing something of a once in a lifetime opportunity to purchase UK assets.”
And a recent report published by Savills earlier this week further highlighted the rarity of such an opportunity, stating “interest rates are expected to remain lower for longer. The weakness of sterling will present a buying opportunity for international investors.”