Last week, Britain’s shocking vote to leave the European Union—known worldwide as Brexit—sent the world into a panicked uncertainty and basically broke the internet. Its ramifications have rocked the globe: David Cameron, Prime Minister for six years, has submitted his resignation; millenials in the U.K. are speaking out angrily against their now decreased opportunities for work, study, and travel; and the popular British clothing site Asos crashed as shoppers took advantage of the weakening pound, just to name a few.

But as a premier real estate agency located in the heart of NYC’s Financial District, here’s what we want to know: how is Brexit going to affect the real estate market stateside, for better or for worse?

I caught up with Daniel Hedaya, President at Platinum Properties, to gain a little insight.

Danny, could you summarize your predictions on how you think Brexit will affect the real estate market in the U.S., and more specifically in New York City?

Generally speaking, the New York marketplace compared to the U.S. marketplace is vastly different. Historically, any global uncertainty has had a beneficial effect on some of the biggest international cities, due to people wanting to diversify and insert wealth into these cities.

There are two important things to think about when I look at Brexit and it’s affect on NYC. First, London and New York are extremely competitive in terms of which one is the better marketplace to invest in. Historically, in London, prices were very strong, and people felt secure investing their money into Britain. However, obviously because of Brexit a lot of focus is shifting from London to New York, so what we’re seeing is that in this “competition,” New York is coming out a little bit ahead. People from all over the world who were initially looking into London to buy property are now shifting their focus to NYC.

Conversely, another effect of Brexit is the weakening currency, both of the pound and the euro. With that weakening currency, foreign buyers’ buying power in New York becomes less. Properties here are now more expensive to them. When the euro was up—when it was at 1.6 or 1.65—foreign investors were more interested in buying because their currency was stronger against the dollar.

So we’re essentially looking at both good and bad repercussions. I’ve been reading up a lot on the more positive effect that you mentioned, about a greater influx of foreign buyers to NYC now that it’s seen as a safer option for property investment over London. Do you think this is just a knee-jerk reaction to the unexpected outcome of the vote, or could it last into the long-term?

It’s definitely not just a knee-jerk reaction. I think the fallibility in the equity markets is a knee-jerk reaction, but the U.S. is still a very strong and stable market and I think that will continue. Lately, there has been a slow down of activity in the marketplace in NYC, particularly on the high end of the market, but I believe that with what’s going on, a lot of people globally will keep looking to New York. There’s a lot of uncertainty in the European markets, and that’s driving more activity in the U.S. market because people are concerned with the volatility over there. So I think it should be somewhat sustained.

What will be interesting to see is if other countries—Germany, Greece—will end up following suit to what the U.K. did.

Because there’s so much increased interest in the U.S. market at the moment, do you think this will bring about a negative affect on domestic buyers—for example, an increase in competition?

No. I think all signs from the Fed are that they’re going to continue to keep interest rates low, and that’s a big component of the domestic buyer. I don’t view foreign buyers and domestic buyers as competing for the same product. Again, the New York marketplace operates as almost a completely separate entity from the rest of the U.S. There are a select group of cities that are appealing to international investors—New York, potentially Miami, Los Angeles, Chicago, potentially Houston or Dallas—but NYC is definitely the leader in that area. I don’t see Brexit as causing anything atypical for the domestic buyer.

So there’s not much of an affect on the more standard, non-luxury market in New York.

Well, I think investors look across the board. We have investors looking in walk-up, townhouse types of opportunities, and we have investors looking into luxury apartments. I think the biggest market that will be affected, which has already been affected prior to Brexit by the slow down, is the ultra high-end market, the $10-20 million plus. We’re seeing a lot of those units stall on the market and not have the velocity they used to have. I still don’t see people going into those ends, but I think, generally speaking, the market as a whole—especially on the low- to mid- end—should be okay.

For more information on BREXIT and the immediate impact on Manhattan real estate, please contact us today, we are happy to answer your questions and hear your insight!