Will the Brexit Vote Drive Up NYC Real Estate?
The vote by Britain to leave the European Union has shocked and confused the world to say the least. In addition to the political ramifications (Prime Minister David Cameron announced he will step down in October), the financial outcomes are staggering. The pound has already plummeted to its lowest level since 1985, with investors turning to the dollar and the yen and the entire European stock market dropping, according to reports from the Times. Though the Bank of England has earmarked roughly $344 million for potential stability measures, the world seems unsure of how the Brexit decision will affect international markets long term.
London is currently one of the top locations for foreign real estate investment, but in the face of an uncertain future, Crain’s presents the assertion that the vote could drive up real estate in New York City as “investors look for safe havens against the threat of a global recession.”
Morris Davis, a professor of finance and economics at Rutgers Business School, told Crain’s, “If Britain leaves the European Union, the future of the EU is in doubt. A heightened sense of risk and volatility drives up the price of any asset that’s viewed as safe.” He also explained that both residential and commercial real estate in New York, along with treasury bonds, are considered stable investments. This holds especially true as the value of the dollar is expected to rise sharply (the IMF estimates by 10 to 20 percent) in the wake of the shaky pound and euro.
Additionally, there’s England’s recently imposed capital gains tax on foreign investors and new visa requirements. Manhattan-based international real estate attorney Ed Mermelstein told Brick Underground that “what we’re seeing in last six to eight months is an influx of investors who’d been looking to do business or invest in London coming to New York—both luxury buyers and institutional-sized investors.”
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