Next week, British voters will decide if the UK should leave the European Union, known as a Brexit — a decision that can mean vastly differently things for London’s luxury real estate market.
While most decisions on high-end real estate have been put on hold, if the U.K. votes to remain a member of the European Union, that will quickly unwind, and “the pause button would sort of be lifted,” said Jeffrey Matsu, a senior economist with the Royal Institution of Chartered Surveyors.
But the interesting dynamic – which may take years to play itself out – is if the U.K. votes to leave the EU. In that case, it’s likely that the current state of uncertainty would prevail, Matsu said, as it will be a two-year negotiation process to hash out details of what the UK/EU relationship will look like.
Then it becomes a matter of economics in the business sector. If much of the service sector moves to mainland Europe and brings higher paying jobs with them, demand for high-end real estate properties — and prices — will likely drop, Matsu said.
As for foreign buyers, a Brexit “yes” could mean an opportunity for them to pick up London bargains, experts believe.
It could also be a win across the Atlantic, in a market like New York City.
“In the last year, we’ve seen a shift towards the New York market from London,” said Ed Mermelstein, a Manhattan-based international real estate attorney. “If the vote passes, London’s popularity will likely deteriorate further, and “more likely than not, the U.S. will benefit.”
Here’s a look at other news from around the world compiled by Mansion Global:
Toronto, Vancouver home price jump unsustainable, says central bank
Bank of Canada Governor Stephen Poloz warned home buyers in Vancouver and Toronto that there's nothing in the country's economy that will let home prices keep rising, Bloomberg News reported. Home prices in May were up 30 percent from the previous year in Vancouver, and up 15% in the same period in Toronto. (Bloomberg News)
Hong Kong, Sydney, Vancouver most overpriced cities for luxury homes
The three cities offer the least amount of real estate for the dollar with the least hope of future appreciation, wrote investing website Valuewalk.com. Today, $1 million U.S. dollars will buy you just 20.6 square meters of real estate in Hong Kong. In Sydney, $1 million U.S. will get you 41.2 square meters of “luxury.” Meanwhile, Vancouver's been ignoring the collapse in energy prices, as the real estate market has reached ever greater highs. (Valuewalk.com)
Chinese developers to launch luxury condo project in Myanmar
Toener Investment Group and local partner SMI Real Estate plan to build 13 luxury condominium towers in Hlaing Tharyar, Yangon’s most crowded township and one of its poorest. The Riverfront Garden project will be close to some of Myanmar’s largest industrial zones and sprawling slum and squatter settlements, and construction is due to begin next month, the Myanmar Times reported. (Myanmar Times)
One in five London homes worth £1m or more
Westminster has the highest percentage of 1 million-pound pads, with 63 percent of the properties listed at £1 million or more, followed by Kensington and Chelsea, with 62 percent, according to online broker eMoov. "With prices across London continuing to rise, surely it won't be long before Barking and Dagenham will see some of its properties priced at £1m or above," said Russell Quirk, the company's chief executive. (City AM)
Demand slows for high-end homes in U.S.
A volatile stock market and a dearth of foreign investors have pushed the inventory of U.S. homes worth over $1 million up by 12.6% in May compared with 2015, according to the National Association of Realtors. Real-estate agents said they are still seeing more expensive homes sit longer than midrange and lower priced homes, giving more bargaining power to buyers who are shopping for high-end residences. (The Wall Street Journal)
Waldorf-Astoria owners attempting to convert hotel rooms to condos
The Chinese owners of Manhattan's iconic Waldorf-Astoria Hotel have asked for permission to begin converting some of the hotel's rooms into condos, The RealDeal reported. The plan could create up to 1,000 condos from the hotel's 1,232 rooms. The New York City Council has placed a two-year moratorium on hotel-to-condo conversions, but the Waldorf may be exempt. (The Real Deal)
New luxury homes, hotels threaten water supply, vineyards in Napa Valley
Plans for a string of new luxury home, hotel and spa developments are straining water supplies in California's premier wine country. "We're told not to flush our toilets," Calistoga resident Christina Aranguren told San Jose.com. Hotel guests will be under no such restrictions. "We're in the middle of a business war," said St. Helena resident Geoff Ellsworth, a member of Wine and Water Watch, a wine industry watchdog. "The collateral damage are the citizens and the flora and fauna." (San Jose.com)