Alongside British Pound, the real-estates or properties in UK was speculated to take heavy beatings. At the early stage of Brexit, it got so panic that Mayor of London – Sadiq Khan – was urged to declare London Independence, and apply to join the EU. That demonstrated how idiocy ruled over Britons.

Suddenly every single Londoners and anti-Brexiteers have become property expert. Up to today, analysts continue drumming fears about collapsing property prices. According to an analysis by French Bank Société Générale, house prices in the most expensive postcodes of central London could fall by as much as 50%.

 

Here’s the typical reason offered by those who still couldn’t accept the reality that Brexit is real. Brexit could result in jobs in the City being cut and businesses potentially moving abroad, because UK cannot access EU market anymore. Workers would then have to sell their London homes.

Société Générale further said the 50% drops in house prices post-Brexit is more damaging than during the 2008 subprime crisis, where house prices in London fell by 20% only. Average London house prices have risen by 74.5% since 2009. That means a £1,000,000 home bought in 2009 would be priced at £1,745,000 just before Brexit.

 

However, if it’s true Londoners are willing to sell their houses at fire-sale of 50% discount, the same house bought at £1,000,000 in 2009 would be as cheap as £872,500 a pop. If you think this is mouth-watering, wait until you hear this. Since the June 23 EU-Referendum, Pound Sterling has lost a cool 10.2% of its value. That means the house is essentially only £783,505 a piece.

Only fools would sell their house now, certainly not Warren Buffett. The billionaire’s bank – Wells Fargo & Co – today agreed to buy a new London headquarters building, a contrarian move as compared to those smart analysts who scream “Sell”. Of course, the same analysts who are screaming “Sell” could potentially tell their clients to quietly “Buy”.

 

Buffett’s San Francisco bank paid a whopping US$395.6 million (£300 million; RM1.57 billion) for an 11-storey office building at 33 Central, King William Street – close to the Bank of England and the River Thames – in London’s main financial district from Slovak developer HB Reavis which is due to finish construction in third-quarter of 2017.

Wells Fargo said it would move 850 employees currently in four London locations into the new 227,000-square-foot building in 2018. If the purchase is an indicator, it shows a vote of confidence from billionaire Warren Buffett that London will maintain its crown as a global financial centre, even after British voted to exit the European Union.

 

The American bank can always choose to rent it instead, because HB Reavis originally hoped to retain and lease the development anyway. To do otherwise and buy it means Wells Fargo is confident that not only property market in London may be resilient and will not collapse horribly, but also that London’s status quo will remain.

“With this new building in London, we are able to bring our team members together in one location in order to more efficiently and effectively manage our operations,” Frank Pizzo, Wells Fargo regional president for Europe Middle East & Africa said in a statement. The new building which would have room for about 2,600 people will have a rooftop garden with views over the River Thames.

 

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July 18th, 2016 by financetwitter

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