In UK property turmoil, some wealthy Asians seek bargains

Thu Jul 7, 2016 8:19am EDT
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By Denny Thomas

HONG KONG (Reuters) - Some Asian institutions and wealthy investors are eyeing London property despite turmoil in the market following Britain's decision to leave the EU, with the subsequent plunge in sterling among the factors making prized assets more attractive.

Panicking retail investors concerned about a possible meltdown in British commercial real estate prices tried to pull money out of property funds, triggering the suspension of 18 billion pounds ($23.4 billion) of such funds this week, the biggest since the 2008 financial crisis.

Property deals in the process of closing have also been re-priced lower in the aftermath of the June 23 referendum on EU membership, because lawyers have inserted "Brexit" clauses in the contracts, said Mat Oakley, head of commercial research at Savills Plc (SVS.L: Quote) in London.

But for some rich individuals and private equity investors in Asia with cash to spare and an appetite for risk, the market is a tempting bet.

"We have seen an increase in inbound inquiries since the Brexit vote, especially from Asian high net worth individuals and family offices, who still see London as a safe destination for property investments," said Henry Chin, head of research for real estate broker CBRE Asia Pacific.

Asian investors are unlikely to have been affected by this week's fund suspensions, as they do not have a high exposure to them in Britain and tend to invest directly in apartments and houses, said Johnny Heng, Wealth Management Chief Investment Officer for Asia ex-Japan at Nomura.

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Centre Point, an iconic post war building in the middle of the capital's commercial district, is clad in scaffolding as it undergoes a makeover, in London, January 26, 2015. REUTERS/Andrew Winning/File Photo