Unless you don’t own a television, telephone, and radio, you’re probably well aware of the fact that the United Kingdom has chosen to leave the European Union in a decision dubbed “Brexit.” Its impact has rippled throughout the world, hurting most at home; the British pound has dropped to its lowest value since 1985, Prime Minister David Cameron has announced his resignation, and foreign investors are pulling out in pursuit of more stable markets.
While Brexit has had a direct impact on the British housing market, what many people don’t know is the impact that it’s had on foreign – or to the United States, domestic – real estate. Britain’s post-Brexit market is likely to be unsteady, sending investors looking for more stable market in which to invest their money. This could very likely cause a boon in the United States housing market, specifically in large metropolises, namely New York City.
The real estate rivalry between New York and London that’s been going strong for decades may finally have taken a turn in favor of New York. Many financial analysts believe that Britain’s departure from the E.U. could lead to a jump in demand for American property in a stable housing market, a belief that’s already becoming reality. International investors have already begun to sell their properties in London and move to New York. Petro Zinkovetsky, a midtown-based real estate agent, has already seen this happening with a client from Russia.
“He owns very expensive real estate in London,” says Zinkovetsky, “[but] he is considering selling it and buying in New York. I expect that in the next few months we will see a huge amount of capital being transferred from London to New York.”
On top of its decision to leave the European Union, England has recently implemented a capital gains tax that will penalize foreign investors who are looking to sell their overseas investments and impose new visa requirements on those looking to purchase. This will only serve to further deter foreign investor away from UK real estate and towards other opportunities.
As a result, it’s reasonable to expect that, over the next several months, real estate prices will begin to climb as the demand rises. It is likely that other metropolis areas like Washington, Miami, Los Angeles, and San Francisco will also witness effects from this European separation, as well as European cities like Paris and Rome.
Jonathan Miller, CEO of Miller Samuel appraising firm notes that while this will likely positively impact the luxury market in the United States, we should also be cautious of being overly optimistic.
“I think we’re in danger of overhyping this as a benefit to New York,” says Miller. However, he does acknowledge one almost certain benefit to the economy of New York.
“This will help New York City in its sort of battle with London as the world’s financial capital, which has the potential for remote potential for more jobs in the securities industry,” says Miller. “Personally, I didn’t believe this would happen – this is an event we will be talking about for generations.”