London-based estate agent Foxtons is blaming a 42 percent drop in profit on Britain’s EU referendum. But as Laura Frykberg explains, the weak pound means luxury properties are still managing to attract interest.
(Reuters) – Property purchases have plunged.
According to Foxtons at least.
First half profit at the London-focussed estate agency has fallen 42 percent.
It blames Brexit.
And predicts the fall in transactions to last until the end of the year.
FXPRO, HEAD OF RESEARCH, SIMON SMITH,
“There is more potential for negative impact from the uncertainty created.”
Buyers in Britain may be fearful, some overseas see opportunity though.
This site is being built into a little piece of prime London luxury.
At 7.2 million pounds per unit, it seems pretty pricey.
Developers say it depends which currency you use.
NICCOLO BARATTIERI, CEO OF NORTHACRE,
“The pound has substantially weakened. Especially against the dollar. So if you look at the profile of our buyers a lot are dollar denominated buyers, either directly dollar denominated or pegged to the dollar. So in the last month, apartments are 10 percent cheaper for them.”
Suspension of UK property funds, analyst downgrades and warning about price falls rattled investor and buyer confidence after the vote.
Despite that, viewings here have actually increased in the past two weeks.
NICCOLO BARATTIERI, CEO OF NORTHARCE,
“During uncertain and difficult times, industries get cleaned up a bit and the stronger become stronger. And we believe because we are market leaders we will become stronger than we were before.”
That may be the case for this company.
But economists say the full impact on the industry will only become clear once Britain begins its official exit.