Asian investors will hurt the most from Brexit, experts warn
Asian investors will hurt the most from Brexit, experts warn
There’s a crisis of confidence among Asian investors in the UK, but that’s not stopping some
With a humongous stake in the London real estate market, it’s believed Asian investors are left most vulnerable to the repercussions of the UK vote to cast off its EU membership.
As told to Bloomberg, BlackRock forecasted that commercial property prices in the UK may drop by 10 percent over the next year, in part due to a glut in the central London market.
This could serve as a chilling portent for investors from Asia, who accounted for an unsurpassed 12 percent of foreign direct investment (FDI) in UK real estate in the first quarter of the year, according to Jones Lang LaSalle (JLL).
Reid Mackay, managing director of EastGate Asia Pte, warned of a “confidence crisis” roiling Asian investments in Britain, with deleterious effects in particular on pending deals.
Shares of Malaysia-based company SP Setia Berhad have fallen 9.5 percent since the vote. The company, in partnership with Malaysian palm oil producer Sime Darby and with support from the Malaysian government’s Employees Provident Fund, is currently redeveloping London’s Battersea Power Staion as a residential complex of some 4,000 units.
More: Singapore’s UOB suspends London property loans following Brexit
Still, this has not deterred Asian investors eager for a fire sale in light of the severely devalued sterling. Megan Walters, JLL’s head of research for Asia-Pacific capital markets, said a buying spree should be all but expected in the Brexit aftermath. A fall in the value of sterling against Asian currencies, she said, would be an opportune entry point for overseas investors into the UK market.
Guo Guangchang, chairman of China’s Fosun Group, takes an optimistic view of counterintuitive efforts in the wake of Brexit.
“For a value investor, volatility is a friend not an enemy. Market volatility and panic will probably bring better investment opportunities. So we are increasingly looking for development opportunities in Europe, and particularly in the UK,” Guo told Reuters.
Similarly, Kwek Leng Beng, chair of Singaporean developer City Developments Ltd, is on the lookout for post-Brexit bargains. The company is currently building homes on a Stag Brewery site in London.
Last year, Knight Frank ranked Singaporeans as the biggest Asian buyers of UK commercial property.
Singapore’s Oxley Holdings Ltd plans to build 3,400 homes in London’s Royal Docks with its Royal Wharf development. Another Singaporean company, Hotel Properties Ltd, is redeveloping a Royal Mail post office for a mixed-use project.
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Source: Property Report