Arcadis says Brexit fallout could lend a helping hand to the prime residential sector
The weakening prime residential property market could be helped out by the fallout from Brexit, according to Arcadis.
The sector, which had been softening following changes to stamp duty by the government prior to the EU referendum, could now see renewed interest from foreign investors looking to take advantage of the plummeting pound and current market volatility.
Overseas buyers can now secure luxury London homes with a 10% discount, Arcadis reported.
Since the vote in favour of Brexit, sterling has fallen relative to the euro by 8%, and 9.5% against the US dollar with further falls forecast before the end of the year, the consultant said.
Mark Cleverly, head of commercial development at Arcadis, said: “For a market that, in some areas, has been stuttering for some time due to ongoing stamp duty hikes taking the steam out of buyer demand, the buying opportunity presented by recent events could be a big plus. More buyers means a more buoyant market which can only be good news for the industry.”
However, opportunistic investment is likely to depend on forecasts of further depreciation of sterling in the short term, Arcadis reported.
And, with some banks forecasting a recovery of sterling during 2017 and agents predicting some recovery of prime London house prices during 2018, those investing £2m now may see their investments rise by as much as £250,000 in value, the consultant added.
Cleverly said that “several” of the firm’s clients have already reported a bounce in enquiries following the referendum.
“This influx of investment coming into the UK could boost British construction again in the future as well as giving shot in the arm to the Treasury through increasing stamp duty receipts,” he added.
Arcadis defines prime residential development is defined as homes with value of £1,350 - £3,499 per ft2.