With a cloud of uncertainty hanging over the Brexit deal, now is the time to invest in prime central London property.
This is according to Naomi Heaton, CEO of London Central Portfolio (LCP), who believes that property prices will start to increase quickly once there is clarity around Brexit.
‘My advice is that the buying opportunity is now simply because the sterling is weak, prices are soft and there’s not a lot of demand. Once there's clarity as to what's happening, investors will come back in and the market will harden very quickly,’ she told Citywire Asia.
The UK cabinet passed Prime Minister Theresa May’s Brexit plan last week amid considerable internal disagreement. Two Brexit-leaning cabinet ministers resigned following the vote, and there are media reports of other ministers re-considering their positions.
What’s more, a YouGov survey of 1,153 Britons found that a majority wanted a fresh Brexit referendum with a preference for staying in the European Union.
There will only be more certainty once May gets the deal approved by her European Union counterparts and the British parliament in the following weeks.
According to a study by Johannesburg-based research firm New World Wealth, high-net-worth individuals (HNWIs) have been leaving the UK because of Brexit concerns, the depreciation of the sterling against the US dollar and a poor performing property market.
Heaton, meanwhile, has also noticed a significant fall in demand for prime central London property from international investors, especially mainland Chinese HNWIs, due to Brexit uncertainty and an increase in property taxes for foreign investors.
LCP handles 650 properties in central London, and nearly 40% of the firm’s clients come from Hong Kong, Japan, Malaysia, Singapore and Thailand. The asset manager currently works with 40 private banks across Hong Kong, Malaysia and Singapore.
LCP’s residential index, which tracks properties in England and Wales, reported that annual property transactions in prime central London had fallen to an all-time low of less than 70 sales a week. That’s a 45% drop since 2014.
However, Heaton said that sentiment in Asia has been improving in the last six months. During her trips to Hong Kong and Singapore in October, for example, she found that more investors were waiting for the right time to enter the London market.
‘I’ve been around long enough to see a number of cycles in central London and the main thing is that when sentiment improves, the market hardens very, very quickly. The thing people are unaware about is how small the market is and how few transactions there are,’ she said.
According to her, prime central London will always be an important hub because of educational needs, tourism, business and culture, guaranteeing long-term growth in property prices.
‘So the buying opportunity is now rather than waiting because most people are waiting, and that means that they will all move together,’ she concluded.