Saturday, May 28, 2022

Pound is the sole determining factor for overseas UK property investors

A soft UK currency continues to be a boon for overseas property buyers intent on hard bargain

For Gulf and overseas investors interested in buying property in the UK, the only detail that matters is where the British currency stands vis-a-vis the dollar. And the lower it keeps getting, the better.

Head of Global Research at Knight Frank, the London-headquartered consultancy, Liam Baily said inward investments during the third quarter were high — not in record territory, but still incredibly healthy. But there has been some slowing down in the last four weeks as buyers wait for an end to the negotiations around Brexit.

Baily said, but the fact is that the pound’s relative weakness over the last 12 months has encouraged dollar-pegged investors to invest in London. And the City continues to surprise on the upside, whether it comes to generating employment or companies going ahead with their expansion plans.

So, the long drawn out Brexit negotiations the UK is carrying on with the European Union don’t seem to be cutting much ice, at least with real estate investors. What they have been following is the pound’s stutter each time the government fails to deliver anything close to a conclusive deal. And with each resignation by another member of the UK Cabinet, the pound seems to take another hit.

He said the fact is property values in London have been on the soft side for some time now, brought on by stamp duty increases.

On the question of whether buyers should wait in the hope of landing a better deal in the coming weeks, Richard Bradstock, Director and Head of the Middle East office at IP Global, said that he thinks there is quite a strong argument to do something sooner rather than later as far as UK property goes. If one hopes that there will be a deal struck between the EU and the UK government — almost regardless of what that deal looks like — this will do two things. It will give the property market and economy a boost. Knowing how things stand will mean people will start making decisions again on investments. And transactions will start to happen with greater frequency again.

Bradstock said the bigger and more immediate argument is that the pound is weak and so for dollar-based or linked investors there is an opportunity to buy at an effective discount. As soon as any Brexit deal is announced, the pound will bounce back. There is a clear argument why people should do something in the next couple of months.

He said the essential supply and demand dynamic of the UK property market is such that Brexit or no Brexit, deal or no deal, there are long-term growth prospects in UK property. And one simply needs to make sure that one is buying sensibly and at value.


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