After Brexit, UK real estate remains attractive for ME Investors
For those who feared Armageddon after the Brexit vote, the recent economic news from the UK has been a pleasant surprise. Over the summer, high street activity was unexpectedly vigorous. Admittedly, this was helped by special factors – UK Olympic success, good weather, buoyant tourism and weak sterling – but it provides solid evidence that consumers are emerging unbowed from the Brexit trauma.
This is perhaps no surprise, the majority of them voted for it after all. Other news has been more unexpected, notably a robust rebound in corporate sentiment. Most business opposed EU exit and confidence measures crashed during July. Given the long-time horizons and risk-aversion of firms and the lack of progress on a political settlement, no revival was expected over the holiday period. The reality has been to the contrary, with a number of high profile surveys reporting sharply rising business optimism in August.
It is early days and unwise to make a snap judgement on the basis of often-volatile monthly data, especially in August. These figures do provide reassurance that 2016 is not a rerun of the 2008 crash, and that UK recession looks a remote prospect (though this was always our view, see previous blog). But we should also be cautious in dismissing concerns about Brexit’s economic impact as “scaremongering” as some Leavers have hinted.
Unlike politicians, businesses cannot sit on their hands and will have to anticipate the changes that Brexit could bring. This is why however encouraging the short-term signs on demand, it is vital that political decision makers clarify their desired options as soon as possible. If not, businesses may respond by scaling back and the post-Brexit bounce will be very short-lived.
We remain relatively upbeat about the economic consequences of the UK vote. But we also believe that there are many decisions still to be made that will be critical to the performance of the economy and its real estate markets, shaping location and investment opportunities into the next decade. For this reason, it is going to take much longer than two months to form a judgement.
Despite the usual quieter summer period in the Region with many of our clients travelling for the hotter summer months to UK, Europe and other parts of the World, we had a very active summer with many clients wanting to meet us and view properties in London. This has led to a good flow of transactions either for investment, or own use based on the weaker pound and possibly a little more flexibility by vendors on price due to Brexit.
Will heads up the Residential business in the MENA region with a particular focus on international residential properties in London, Manchester, Birmingham, Germany, Portugal & the USA.
Prior to joining JLL in 2013 Will ran his own company, ‘Olive RE Consultants’ where he was focused on selling London property to Far Eastern and Middle Eastern buyers. Will moved to the U.A.E in early 2004 from London where he worked for Savilles, running their East London New Homes division.