Dubai: Not all UK developers will be forced to offer discounts or other incentives to win over overseas buyers despite all the uncertainties thrown up by Brexit and the weakened pound. Those with locations associated with a touch of heritage will do just as well in this highly volatile atmosphere surrounding London realty’s prospects.
“If it’s a developer offering yet another office tower block in an area where there are already thousands of such units, then they will need to do a major rethink on their pricing,” said Charlie Walsh, Director of Sales and Marketing at Lodha UK, a subsidiary of the upscale Indian developer Lodha Group. “And these are typically reliant on investors rather than an eclectic spectrum of buyers. That’s where the discount possibilities come in.”
Lodha UK is making the case for a residential project — Lincoln Square — offering 200 units in the “heart” of the city’s legal quarter, where centuries old law firms — and more recent ones — have their nameplates on. Then there is the proximity to the London School of Economics and King’s College London.
“We are not offering any discounts — there isn’t going to be any immediate supply of new properties in the same location,” said Walsh, who was in Dubai as part of a roadshow that also saw him call on investor prospects in the Far East. Prices start from 900,000 pounds for a studio. No mention was made for how much the larger format apartments or the two penthouses would command.
“There was never any doubt that we would continue with the UAE visit this week after the referendum results were out. Regardless of the vote, people will still head for London and need flats to live in, for work or to head to the schools and universities. In our case, there aren’t that many developments in London taking place on a historic site.
“In fact, we plan to be in the Gulf again this year to meet with potential buyers. Business must continue to move on.”
Lincoln Square is due for a Q3-18 completion. Lodha UK is planning to launch another project, at No. 1 Grosvenor Square, at the former address of the Canadian embassy.
A handful of UAE based developers also have projects ongoing in London, including Damac, Abu Dhabi Financial Group and the real estate arm of Lulu Group. This is apart from the gargantuan investments Gulf institutions and individuals have put into prime London assets.
But Brexit will trigger some change in the short-term dynamics for UK real estate. According to Guy Grainger, CEO for EMEA territory at JLL, “Some decisions may continue to be put on hold, or reassessed entirely.
“At the same time, we expect there may also be some positive implications for other mature markets in Europe and, potentially, in the light of currency movements, international investors may be attracted to certain parts of the UK market. This could be relatively short-lived … at least until currency volatility subsides and notwithstanding the underlying uncertainty which will colour sentiment for at least a couple of years.”
Yields on rental properties should remain unchanged
According to JLL projections, any impact on rents from London assets may be limited by tight supply. “But activity will be adversely hit while initial uncertainty about direction and timing continues. Investor sentiment may also remain subdued in the short to medium term, although a drop in Sterling may provide a moment in time for some opportunistic international investors.
