Friday, July 8, 2016
Brexit's impact on New York property
Two weeks since Brexit and global markets continue to adjust to this new uncertainty. The pound sterling declined to a 30 year low. The British and world markets continue their reactions.
Here are potential impacts to New York property as result of Brexit.
1) New York edges past London as top property destination for foreign investors
London and New York property have always been competitors for foreign investment. Both are regarded as the most prime and secure markets in the world, a safe place for asset diversification.
As result of Brexit, the London property market has become uncertain. This is because of uncertainty regarding valuation of the pound sterling and Britain's economy.
At least until the Brexit situation stabilizes, New York is now the preferred city compared to London.
2) Foreign transaction volume in New York can move either way
In terms of residential property investments, we don't know whether foreign buyer transactions would increase or decrease in New York.
Since global markets are uncertain, foreign buyers may have a wait-and-see attitude. This could keep New York's transaction volume flat or even decrease. Alternatively, foreign buyers may decide to buy in New York as opposed to London, which would increase New York's transaction volume.
3) Interest rates to remain low, a plus for New York's buyers
Global uncertainties will result in the Federal Reserve delaying interest rate hikes. Continued low rates is good for the property market as it lowers cost of mortgages. Both residential and commercial properties will benefit from this.
Wei Min Tan is a Manhattan, New York property broker focusing on global investor buyers. He has been interviewed by CNBC, CNN, New York Times and The Wall Street Journal on the Manhattan property market. Wei Min can be reached at email@example.com