KUALA LUMPUR: Despite the looming referendum for Britain to exit the European Union (EU), property investments in the United Kingdom are expected to thrive, according to the global real estate services provider, Savills.
Its head of world research, Yolande Barnes said there will be continued demand for residential and commercial properties due to limited supplies in London.
“We are still uncertain about what would be the impacts on Brexit. London is a very big city where the supplies of newly built properties are tiny compared to the overall number of households,” she told NST Business after the Savills Malaysia Breakfast Forum themed: Navigating 2018 & Beyond, here today. Barnes said properties yield in the UK are still at a competitive level, particularly for commercial properties which are higher than other major cities in Europe.
“I don’t see that London’s yields are significantly different from other global cities yields. It depends on what type of properties and development sector,” she added. She said property developers should pay attention to the fundamental of demand and supply.
“Anybody is looking for future value needs to pay attention to fundamental of who is coming to the city and how the city is growing in both population size and what kind of wealth is being generated,” she said. Barnes said the office leasing market in London is very encouraging and expected demand for rentals will be high in the long-term, citing that the future’s developments are currently being built.
“As long as people want to live and work in the city, and business thrives – people still believe in the long-term future of London. It still has enough pull-factor to attract people into the city, despite Brexit uncertainties,” she said. She pointed out that there are lots of rental properties becoming available at completion, which would trigger some growth in housing prices.
Savills South East Asia chief executive officer, Christopher Marriott said the city has become more accessible to more people, creating the urban-regeneration of a large number of affordable residential.
“We see a lot more demand for affordable private-housing from the people coming into the market. With this regeneration going on, it has been a big boom for the availability of real estate in London,” he said. Savills Malaysia executive chairman Datuk Christopher
Boyd said there are still plenty of opportunities in the UK for foreign developers to provide residential accommodation. “It is only a question of doing a proper market research, deciding where the effective economic demand lies and build for it.
“Maybe the game at the moment is not for most expensive high-rise but there are many other segments that can be catered to. It’s more of a local market demand than foreign buyers,” he said, adding that Malaysian developers primarily build residential developments in the UK.
He said the Malaysian developers’ (SP Setia and Sime Darby Property) involvement in the Battersea project will be a success due to its well-conceived, designed and built. “However, the market is cyclical at the moment and is a bit slow. So it may take a bit longer to recover,” he added.
Axis REIT Managers Bhd head of investment Siva Shanker said Malaysian property developers’ investments in overseas will be good to reap better yields.
“As they (developers) grow, they need to look for a new horizon. Everybody goes international. Every fortune 500 companies are also international. “If they want to grow bigger and expand their footprints, every company must expand overseas within the region and slowly expand outward,” he said. Siva said it was a normal growth pattern for Malaysian companies going overseas and Asian countries like Vietnam, Thailand and Cambodia have high growth prospects.