Charlie Walsh, director, sales, Lodha UK discusses the positives of Brexit
The grey cloud has been lifted over Cannes this year as the property industry emitted a renewed sense of positivity, relieved of the uncertainty felt 12 months ago in the lead up to and around the European Referendum.
There is no doubt the industry was nervous pre-referendum and, married alongside stamp duty reforms, the property market has been adversely affected.
In recent months, however, we have witnessed a steadily increasing level of interest in our new London development, Lincoln Square, and, as other developers and housebuilders start to talk more positively, both privately and publicly, about the state of the market, we have sharpened our focus on what is driving this divergent performance between the new build and resale markets.
First, increased transaction costs combined with lower liquidity levels in the resale market have resulted in a much broader spectrum of people evaluating opportunities in new build developments. Many of our buyers at Lincoln Square will admit they would have dismissed new build developments outright a few years ago, but now consider it the only way to secure a high quality home in a supply constrained and illiquid market. This has resulted in a notable increase in the participation of domestic buyers in London’s new build market, which is extremely positive for the industry.
Second, we are seeing growing optimism from London’s international residents who are from non-EU countries. There appears to be a growing perception among this group that the UK’s exit from the European Union may deliver something positive for them. We have had enquiries from people studying at UK universities who now feel more optimistic about their prospects for securing work visas and professional opportunities after their studies, as the ties between the UK and their home country strengthen.
Finally, there is a growing sense that many of the visible headwinds that started to accumulate towards the end of 2014 have now passed. Of course we have the actual EU exit process to contend with, and possibly another Scottish referendum, and then another general election. But as the market has shown its robustness over the last twelve months in the face of a range of challenges, these events start to feel like business as usual. There will undoubtedly be new challenges to overcome in the next twelve months, but there is a renewed confidence the market has the capacity to deal with these.
In time, the referendum may be lauded for asserting a healthy readjustment to the market and perhaps even a lesson learnt for the industry. Those schemes which continued to do well through adversity were the differentiators and the innovators. As such we are likely to see developers striving to carve a new niche for themselves.
