Weak pound, scarce housing offer good opportunity to invest in UK properties

London Spring Place, one of the latest UK purpose built student accommodation projects marketed by Cornerstone International Properties, is fully equipped with amenities catered to student living and located within walking distance to the nearest university.

KUALA LUMPUR: The weak post-Brexit pound and insufficient housing provide a good opportunity for Malaysian investors in the UK real estate market, said Cornerstone International Properties (CSI Properties). 

The Malaysia-based real estate investment consultancy said the UK would continue to face uncertainties once Article 50 of the Lisbon Treaty -- the formal process of leaving the European Union (EU) is invoked. 

CSI Properties, in a statement on Friday, said the pound fell to a 31-year low against the US dollar since the EU Referendum, and took yet another beating when UK Parliament passed the Brexit bill this week. 

“Comparatively, the fall of the pound is more drastic than the ringgit. 

“House prices (in the UK) have taken a dip, particularly in London, and the combination of the two factors presents a good buying opportunity for Malaysian and other foreign investors looking to invest in UK property,” said CSI Properties spokesperson Virata Thaivasigamony. 

However, Virata said the window of opportunity for a favourable exchange rate might be a short one, citing predictions by the Bank of America that it expected the pound to suffer only another plunge, which would be its lowest, when Article 50 is invoke. 

“The UK will be on sale again. This will be the best time to take advantage of the pound as the currency will strengthen once official Brexit negotiations get underway,” he said. 

Virata added that more Malaysian investors were seeing the opportunity that Brexit presented, understanding that while there might be uncertainties ahead, UKs fundamentals were strong enough to ride out the Brexit process. 

CSI Properties saw a 60% increase in sales volumes in 2016 compared with 2015, of which more than half were from UK real estate, an indication that Malaysian investors were taking advantage of the current favourable exchange rate following Brexit. 

Additionally, he said more than 65% of the agency’s UK real estate sales came from UK student property alone. 

Virata said the UK student accommodation sector grew 37% since 2014 from £30.9bil to £42.5bil, making it one of the fastest growing asset classes in the UK property market. 

However, supply is still unable to keep up with demand, as studies showed that the UK needs 250,000 to 300,000 houses every year, but latest figures revealed that this target has consistently not been met, he said. 

He cited Lembaga Tabung Haji and GuocoLand as among Malaysian organisations that had made a significant presence in the UK property market. 

Tabung Haji has allocated RM2bil for real estate investments in the UK and Australia, while GuocoLand has expanded its portfolio for the UK and Australian markets through a strategic 27% stake in Eco World International. - Bernama