Financial markets reacted sharply immediately after the UK voted for Brexit, with the pound touching 30 year lows and global equity markets initially crashing up to 10 per cent, although there could be a silver lining for the Prime Central London property market.
Cast your mind back to 2008 in the wake of the Lehman Brothers crash, the pound dropped in value as did property prices. To overseas investors, this became a great buying opportunity. To those buying in other world currencies, London property suddenly looked cheap. Demand soon meant that property prices started to rise but this didn't deter investors as Sterling continued to fall in value thanks to the Bank of England's quantitative easing strategy.
Even though their assets – PCL properties – were rising in value, they simultaneously were becoming cheaper for overseas buyers to buy thanks to the currency markets. Sterling has already fallen to historic lows in the wake of Brexit, forcing the Bank of England to intervene.
We could see a repeat of the 2008 scenario as investors return to PCL properties as an investment class. Furthermore, London's rental market is likely to see increased demand as tenants choose to rent rather than buy in a turbulent market. In the medium-to-long term, the UK will remain one of the world's strongest and most secure economies with London siting at the top as the world's leading financial centre, and we believe the longer-term trajectory for the London property market is upward, but with some turbulence in the immediate term.