Since our last bulletin, it is now thirteen days since the UK voted to Leave the European Union. What an extraordinary thirteen days it has been. Our Prime Minister David Cameron has resigned from post. Nigel Farage has resigned from being leader of the UK Independence Party. Jeremy Corbyn remains leader of the Labour Party despite a vote of no confidence from 100 members of Parliament including his own shadow cabinet. Boris Johnson, the architect of the Leave campaign, has stood down from the leadership campaign to replace David Cameron. Theresa May is the front runner to succeed him, one of two women in the final vote. Added to this, the markets have faced extreme financial turbulence and the pound has fallen to a 31 year low at $1.30 and there is clearly no Plan around how to exit Europe…………….The UK was braced for financial instability in the event of a Leave Vote, but never the political fall-out which has surprised and unnerved the country as well as people around the World. Luckily the democratic process in the UK is extremely well prepared for situations such as these and a new Prime Minster will be at number 10 Downing Street no later than 5th September.
Despite all the above (!), our prime central London residential market has remained surprisingly resilient with transactions continuing, on the back of modest renegotiations on price of no more than 5% . ONLY a handful of buyers have actually walked away from deals. What has been noticeable, however, is the lack of new buyers other than those with dollars. The Greenback is King. We’ve been inundated with enquiries from around the world, especially America and the Middle East, where the currency trade makes a huge impact on affordability. The prices here for the first time in 15 years have an element of ‘real value’. If ever there was a time for your high net worth clients and investors to look at London and indeed the whole of the UK as an ‘opportunity,’ it is now. Best in class real estate remains reasonably bullet proof as it is similar to the art market where the ‘rarest of the rare’ still commands a premium but if you have dollars, there is huge advantage in the currency play.
We fully expect short to medium term volatility to disrupt our London Residential market but global capital from around the world continues to seek a home. Despite the extraordinary situation in the UK at the moment, London remains one of the greatest capital cities in the World and prime central London real estate remains an asset class and glittering prize to have and to hold for the long term.
Update from our Christie’s International Real Estate Affiliate Strutt & Parker.