JLL experts comment on affects of Brexit vote in Asia Pacific property markets
In the aftermath of the UK deciding to exit the European Union, the markets are volatile and the value of the pound has declined sharply. With considerable uncertainly and no real precedent, Asia Pacific real estate investors and corporate occupiers are looking to mitigate risk.
According to JLL experts, Brexit could bring short term opportunity for international investors although market sentiment will remain cautious. In Asia Pacific, local occupiers and multinational companies serving domestic economies will help to insulate the region from volatility.
JLL Asia Pacific CEO Anthony Couse says: “The repercussions are being felt around the globe and we are likely to see a temporary slowdown in demand from Asian occupiers with operations in the UK. However, in the long term, once clarity emerges about the UK’s exit negotiations, we expect a resumption in confidence.
“For property markets, there will be a correction but that should be followed by an upturn as opportunities re-emerge in core markets and the benefits of a weaker sterling are recognised. As the political and economic situation in the UK continues to unfold, we believe that most Asia Pacific investors and occupiers will take time to digest the implications before taking medium to long-term decisions.”
Alistair Meadows, head of JLL’s International Capital Group, Asia Pacific, says: “There remains a substantial weight of capital ready to be deployed from Asia into international investments. The short term effect of Brexit is likely to be that this Asian capital will potentially seek opportunities closer to home, in markets that are comparable in transparency to London, such as Sydney.
“However, for long-term institutional Asian investors, London will most likely continue in its position as one of the world’s foremost investment destinations. Indeed post Brexit market volatility may create attractive buying opportunities in the UK for Asian investors in the next six to 12 months.”
Mandy Wong, Head of International Residential Property Services at JLL in Hong Kong, said: “Hong Kong individual investors remain interested in buying residential assets in UK for long term investment. The number of potential buyers visited our exhibition of City Island, a London residential project, over the weekend, were similar to the exhibition that we held in early this year. We and EcoWorld Ballymore, the developer of the project, are very pleased with the sales response. We found that many potential buyers believe it is a good time to buy prime property in London after the value of pound plunged. Since the shortage of new housing supply in London is expected to continue in next few years, they believe the fall in capital value would be limited.”
Dr. Megan Walters, head of research for Asia Pacific Capital Markets, JLL, says: “It is possible we may see a short term hold up of some Asia Pacific deals, involving funds containing a high proportion of European based investors. However, the weight of global capital is such that any gap left by European investors will be rapidly filled by other capital sources.”