EVERYONE is waiting to see what the future holds when the United Kingdom withdraws from the European Union and how it will affect the property market.
The shock of the referendum result is expected to hit London property the hardest, where there is already a lot of uncertainty with many expecting that deals will fall through this year.
Last year, financial research houses said Malaysian developers undertaking projects in London worth several billion ringgit would most likely feel the effect of Brexit.
However, if you speak to the Malaysian developers, they are not so much worried about Brexit, but rather the global economic and political climate.
Malaysian developers with exposure to the UK include SP Setia Bhd, Sime Darby Bhd, Eco World Development Group Bhd, Eco World International Bhd, Eastern & Oriental Bhd (E&O) and YTL Corp Bhd.
Both SP Setia and Sime Darby are redeveloping the Battersea Power Station in London’s Nine Elms.
Sime Darby Property managing director Datuk Jauhari Hamidi said the medium to longer term impact of Brexit on the Battersea development in London was anticipated to be minimal.
This was given the project’s iconic design as well as its location flanking the London prime central area, which was considered to be a safe haven for investors, he said.
“The results from the referendum will not impact the viability of the Battersea Power Station project. We are confident the iconic development will continue to generate interest in the longer term,” Jauhari told NST Property.
The Battersea project is 40 per cent owned each by SP Setia and Sime Darby Bhd while the Employees Provident Fund owns the rest.
The project, which was approved in 2010, would have a gross development value of £10 billion (RM55.5 billion).
By the time it is completed around 2025, the once derelict site will house 25,000 people and is expected to create more than 20,000 jobs.
About six months ago, Apple had agreed to lease office space within the historic Battersea Power Station. It will beit the largest tenant for the property by occupying about 500,000 sq ft of space across six floors of the Central Boiler House Power Station, representing 40 per cent of the office space in the whole development.
“This proves that despite Brexit, our Battersea Power Station project remains a favourable location for businesses due to its legacy, potential and connectivity,” he said.
According to a report by real estate consultancy Knight Frank released last week, office take-up rate in Central London for the final quarter of last year totalled 3.5 million sq ft, the highest since the third quarter of 2015. This was 15 per cent above the long-term average and driven by strong activity across the whole market.
Knight Frank head of central London offices Stephen Clifton said: “We see London’s long-term growth story unchanged with the decision to leave the EU.
“A wall of overseas money is migrating towards London this year. The main problem facing investors will be sourcing stock. Overall, we enter this year with less certainty than many of us would like or are used to.
“However, the fundamentals of the London office market are strong. In the leasing market, the tech firms have shrugged off Brexit and are taking space.
“In the investment market, overseas investors are showing a strong appetite for London offices. We view this year as a year that will surprise on the upside,” said Clifton.
Meanwhile, Knight Frank chief economist James Roberts said recent office deals by Apple at Battersea Power Station and Amazon at Principal Place reinforced the message that tech firms was still committed to growth in London.
He viewed Brexit as a two-year road bump for London economy, with some back-office jobs going abroad, but the number is being exceeded by job creation in the digital sector.