Within hours of the EU votes being counted last week, London Central Portfolio (LCP) released a statement urging investors to consider the opportunities that may arise against a backdrop of volatile financial markets, insisting that the outlook for the Prime Central London (PCL) property market is a positive one.
LCP forecast that the prime central London property market will benefit from a flight to quality and the security of blue-chip tangible assets, against a background of highly volatile financial markets, helping to place upward pressure on property prices in the heart of the capital.
“It is now likely that property prices in Prime Central London will increase. Whilst LCP had originally predicted that this would not occur until 2017, the signs are that the re-entry of investors into the market will be more rapid than originally expected,” said Naomi Heaton, CEO of LCP.
In light of the anticipated appetite, particularly from foreign investors, London Central Apartments III, the quoted property company advised by LCP, has decided to make a second share offering available. It exclusively invests in the private rented sector in Prime Central London.
LCP believe that the Brexit vote creates an ‘investment opportunity’ for new investors in LCA III but warns that there is investment risk and a possibility that the value of any investment may go down.
It is predicted that there will be a surge of new buyers, who have been poised on the side-lines awaiting the results. LCP, as a real estate investment advisory, specialising in Prime Central London, has already received enquiries from Asian and Middle Eastern investors since the EU vote.
Heaton continued: “Whilst the political upheaval of the monumental changes that have come into play is undoubtedly going to have a fundamental effect on financial markets, of which London plays such an important role, it is expected that PCL property itself will see a surge of activity. It is expected that PCL real estate will benefit from a flight to quality and the security of blue-chip tangible assets, against a background of highly volatile financial markets. Movement in gold prices, to which PCL is historically closely aligned, has already increased by 5%.
“According to UBS, The Bank of England will at the very least keep interest rates on hold, but a cut is very likely. Other forms of stimulus are also possible. Alongside domestic homeowners, this will benefit investors into the central London property market. It should be recalled that the dramatic bounce back in PCL was supported by a weak sterling and falling interest rates during the credit crunch. Prices rallied within one year and outperformed almost all other financial indices.
“Whilst markets are reeling in shock and assimilating the news, a short term downturn in financial markets is undoubtedly expected. However, it is also anticipated that they will recover over the two year Brexit negotiation process and London will continue to hold its position as a financial powerhouse.
“It should be remembered that international investors have always been, and will continue to be, attracted by PCL’s reputation as an aspirational, cultural, and educational centre. They are reassured by its rule of law and unequivocal title to property when it comes to ownership. All factors unaffected by the UK vote to leave and which investors worldwide will continue to find attractive, even as the UK embarks on the path of being an independent power outside the European bloc.”