With its vote to leave the European Union via Brexit, the United Kingdom may have inadvertently shed its reputation of being a safe haven for property, observers said.
They expect investors to flock to Asian markets that offer stability and abundant supply, such as Singapore, Hong Kong and Australia.
Investors are likely to take high prices in their stride, Bloomberg reported. Hong Kong and Singapore are Asia’s two most expensive residential markets.
“Capital will look for safe havens, countries that offer stability. Mature, developed markets will look attractive again,” said Mr Henry Chin, head of research for Asia-Pacific at CBRE.
Gains could trickle to Japan. Its currency boomed amid global equity losses of almost US$4 trillion ($5.38 trillion), as investors dropped riskier assets following the exit.
“The world recognises Japan as a safe haven. Because of that, Asian money that has been looking to invest in Europe will come to Japan,” explained Mr Takeshi Akagi, national director at Jones Lang LaSalle.
“As uncertainties unfold in Europe and spread out to global markets, Japan would, relatively, be considered as a predominant place to be,” he added. Prices of commercial property in London may fall by 10 percent by the end of 2017, asset management firm BlackRock Inc. said in a note. This will be led by an oversupply in central London, the firm added.
Jefferies LLC analyst Mike Prew believes that as many as 100,000 jobs in international corporations could be moved out of the United Kingdom. Still, it is not all doom and gloom.
“With the Brexit event, one thing is a given: that interest rates are going to remain low for a long time and that’s good for the property markets,” Mr Chin added.
“We will see value emerge in the U.K. over time but no deals are going to happen in a hurry post-Brexit.”
Visit Bloomberg for the full report.
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