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Want to invest in real estate in the UK? Buy now

REAL ESTATE
By Peter Muiruri | July 7th 2016
Richard Britten-Long

Richard Britten-Long has the gaze of a sleuth. Straight, confident and at times charming. For 40 years, he has straddled the world’s real estate field, reeling in investors willing to grab a stake in any one of his start-ups based in the United Kingdom.

He was born and bred in Kenya but acts as a citizen of the world. His family owned Nderit Estate in the Rift Valley – a huge tract of land that gave way to the world-acclaimed Nakuru National Park.

His dalliance with the wide, open spaces of the African Savannah may have planted the seed for him to get into the property market later on in life.

In 2003, the real estate banker founded Wichford Plc, a property management company now known as Redefine, which he exited in 2008 after selling his interest to another company called Corovest.

A year later, he was managing Kenswick, another property management firm. And he is not done yet.

Last year, Britten-Long founded St Paul’s Property Trust Plc, a company that invests primarily in UK government and quasi-government occupied properties.

In a few weeks’ time, the company will be listing on the Nairobi Securities Exchange (NSE), hoping to raise Sh4 billion and give Kenyans a slice of the UK’s property market.

However, with the recent political developments in the UK, such overseas investments are currently getting a life of their own. But Britten-Long says he has never had a single sleepless night over the much-talked about “Brexit”, which refers to UK’s recent move to leave the European Union.

“I was actually having my favourite drink as I waited for the results,” he says tongue-in-cheek. “I am yet to see any inconvenience in the market as a result of the ‘leave’ vote.”

Since the UK referendum results were released on June 24, property markets around the world have been thrown into a spin as investors wonder what to make of the move that saw the sterling pound depreciate.

For example, a report by CNBC says that United Overseas Bank, Singapore’s third largest lender, suspended its loans programme for London properties in the wake of uncertainties caused by Britain’s vote to leave the EU. Other big markets such as the United States and Canada have adopted a wait-and-see attitude before making any drastic fiscal adjustments that could rattle the already jittery property sector.

Then there were the fears of London losing its position as a global business hub that has been used as a model owing to its strict property management regime. “Everybody looked at the dark cloud caused by Brexit. I choose to see the silver lining that is of interest to the Kenyan investor,” says Britten-Long.

What then is this silver lining?

According to him, the fundamentals that keep the UK market afloat are strong enough to weather any temporary tremors arising from Brexit and making it more appealing to foreign investors.

The UK is the singe largest importer of goods from the EU, with statistics showing that EU exports to the UK are ten times more than the UK exports to other European Union countries. In addition, the devaluation of the pound is likely to boost demand for UK exports as they begin to look cheaper.

Locally, says Britten-Long, the current exchange rate between the pound and the Kenya shilling allows Kenyan investors to get a foothold in the UK property market “this week than last week” for the same amount of Kenya shillings. He also thinks listing on the NSE next month will afford local investors an opportunity to get a pie of UK’s real estate market with a minimum number of shares worth Sh1 million.

“This is an opportunity for Kenyan investors to enter the UK property market at discounted rates. There are few risks for us who deal in property let out to UK government agencies. We do not expect the government to go broke,” says Britten-Long.

But would not such an investment give lower returns than pre-Brexit levels? I asked him. “Real investment returns are long-term. The UK will rebound sooner than later since the real estate market is more institutionalised. Invest and wait,” he said.

According to Britten-Long, Kenyan investors going for UK’s real estate have the added advantage in that foreign earnings are exempt from taxation in Kenya. Brexit vote is also a blessing in disguise for those who are apprehensive about investing in Kenya due to political uncertainties ahead of next year’s General Election.

Speaking to Home & Away before the vote, Britten-Long at the time said: “Personally, I do not think Britain will exit. Anyway, the pound will soften in currency against the Euro, and buying property will be cheaper at that particular time, which means higher returns for investors. But one way or another, the market will eventually stabilise. Also, the fundamental attraction of UK property assets has more to do with the assets themselves than whether they sit in or outside the EU.”

Currency devaluation

He was wrong on one count, Britain voting to leave the EU but right on the question of the pound softening. Other experts with a foothold in the British market have also focused their attention on the value of the sterling pound.

In its post-referendum review, Knight Frank states that a fall in the value of the sterling pound, combined with falling property values, will be a buy-sign for opportunistic overseas investors once the initial correction has occurred.

The realtor firm also cautioned that there is likely to be a further period of uncertainty as the terms of the UK’s exit are worked out with the potential to affect some parts of the market as prospective buyers weigh up the implications.

Still, Knight Frank says the subtle currency movement is a boon to foreigners eyeing the UK’s real estate market. “While the economic uncertainty during our exit negotiations will undoubtedly deter some domestic investors, the relative discount available to purchasers in foreign currencies will attract significant interest,” states the report. In its post-Brexit vote report titled, EU Referendum-Making Sense of Brexit Five Days On, Jones Lang LaSalle (JLL), a global services and investment management firm, says the UK remains an attractive global destination owing to the rich culture.

The weakening of the pound, says JLL, will make the UK a more affordable destination for international travellers, most of whom will be seeking investment opportunities, especially in real estate. Brexit may mean different things to different people in the UK. However, as a Kenyan investor eyeing that market, you are better off buying now and waiting for the price appreciation which industry players say will not take long.

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