By Staff writer
CEO of Core, UAE Associate of Savills, David Godchaux, believes that presents an opportunity for people in the UAE
House prices in London's prime locations will fall by 9 percent this year and not grow again until 2019 as buyers, already hit by increased property taxes, wait to see the outcome of Brexit divorce talks, estate agents Savills said.
Prices in prime central London, which includes the capital's most expensive areas in Knightsbridge, Belgravia and Mayfair, have been falling for two years, according to Savills, hit by property tax increases on the costliest properties and buy-to-let and second homes.
But the outcome of the June 23 referendum has further dampened demand with some buyers biding their time before buying property and others bargaining down prices.
Savills said there would be no return to price growth until the talks on pulling Britain out of the EU, expected to start next year, reach a conclusion.
CEO of Core, UAE Associate of Savills, David Godchaux, believes that presents an opportunity for people in the UAE.
“There remains a strong preference for London properties in the long-term as the city is still considered by most as a safe haven, even on the back of Brexit," said Godchaux.
"Nevertheless, we have seen some Middle East investors looking to re-allocate a part of their portfolio to other geographical areas, due to the uncertainty in the mid-term that Brexit has triggered.
“Dubai, as another strong regional safe haven, has recently benefited as we have witnessed an increased inflow of capital from other GCC countries in the context of a bottoming market and high yields, making the emirate increasingly attractive.”
Property was one of the first sectors to be hit by the outcome of the Brexit vote with the largest housebuilders initially losing up to a third of their value and investors pulling cash from commercial funds.
Several national housebuilders and surveys suggest demand has returned, but central London, where foreign investors form a large part of the demand, is likely to be most affected by the uncertainty over the terms of a Brexit deal.
Prices in central London fell at their fastest rate in nearly seven years in August, according to consultancy Knight Frank.
Savills predicted that when prices do rise in 2019 it will be by 8 percent but the company also said that any demand upturn would depend on the level of taxation going forward and the terms of the Brexit deal.
*With input from Reuters.
Interesting - don't agree with some of this report. ! We were on a Buy to Let property search in London (1 week) back 3 weeks ago. Prices in the sub GBP1M price range (SE London) are virtually same as pre-Brexit. Maybe more owner occupier buyers, but the market seems buoyant and bubbling away. There maybe some minor discounting ~5%, but not to any significant level.
Also, West End flat prices (sub Million) seem static.