With numerous polls giving conflicting results about whether Britain will vote to stay in or leave the EU, it will be a contest that’s too close to call. But there could be a silver lining in the cloud.
While 'Bremain' won't have a major impact, the likehood of a 'Brexit' will affect investors in the UAE and the wider region.
The UAE is the UK’s fourth-largest export destination, according to data from the UK’s Revenue and Customs, the British tax authority. The impact on trade is expected to be minimal, because most the goods go in one-way - from the UK to the region and not vice versa.
But for UAE investors, especially those exposed to real estate in England, the value of the pound is important.
Sovereign and private investors from Qatar, Saudi Arabia, Kuwait and the UAE have been prolific buyers of British assets in the past decade, snapping up billions of dollars worth of property, mostly in London.
A Brexit vote is likely to produce sudden changes in exchange rates, which would appeal to property investors, say analysts. A drastic drop in the value of the pound could make property in the UK more attractive and actually offer an exceptional opportunity to purchase UK assets cheaply.
Knight Frank said the UK’s potential exit from the European Union will weaken the pound which has potential implications for the central London market, where foreign home buyers are more active.
A number of GCC investors are adopting a "wait-and-see" approach when it comes to their real estate decisions in the UK amid the looming vote, real estate consultancy Knight Frank said in a recent report.
A Brexit vote is likely to be disastrous on the pound, says Hussein Sayed, Chief Market Strategist at FXTM, currency trader in an analyst note on 23 June.
"Many analysts were trying to predict the magnitude of sterling’s fall in case of a Brexit, whether it’s 10 per cent, 20 per cent or more than 30 per cent, all agree it’s going to be a severe one. In equity markets banking sector will be hit the hardest, and will likely to see a double-digit drop in UK’s major banks"
For the next 24 hours, liquidity most likely to dry and big swings to be realised in all asset classes, but the real action to start after midnight when individual regions start to declare their vote counts, and will only have the final results by tomorrow early morning.
