UK economy

The weaker pound is making the UK a more attractive destination

From a Hong Kong perspective, the UK’s appeal as a hub for higher education and tourism have improved since Brexit -- at least in currency terms

PUBLISHED : Sunday, 09 October, 2016, 9:50pm
UPDATED : Sunday, 09 October, 2016, 10:24pm

The weaker pound is making Britain a more attractive destination for Hongkongers to spend a holiday or further their studies, according to experts in the tourism and education industries.

Jason Wong Chun-tat, chairman of the Hong Kong Travel Industry Council, said demand from Hongkongers to travel to Britain had grown 10 to 20 per cent since late August.

He believes visitor numbers will continue to rise, particularly during the Christmas and New Year holiday season. But they would not increase “too drastically”, which was subject to the availability of air tickets and accommodation, added Wong, who is also director and general manager of tour agent Hong Thai Travel Services.

The pound dived in Asian trading on Friday, which traders blamed on concerns over Brexit and a flash crash in the market. The currency fell 6 per cent at one stage to US$1.1841, the biggest move since the Brexit vote. It later recovered most of those losses, trading 1.4 per cent weaker at US$1.244.

But with the uncertainty over the terms of the new deal with the European Union, investors will take a longer time to digest
Koh Keng-shing, Landscope Christie’s International Real Estate

The sudden slide in the pound prompted Bank of England governor Mark Carney to ask the Bank for International Settlements, which represents the world’s central banks, to review the events that took place in the early hours of Friday morning, according to a report in The Guardian.

Angus Tang Chi-wing, director of HKIES, an education consultancy service company for Britain, said there had been a 20 to 30 per cent increase in the number of people applying to study there since the Brexit vote in June, although part of that growth was due to this being the peak time for applications for studies in the country.

“We expect the number of applications to rise further in the next one to two weeks,” he said. “It may take some time to reflect the impact of the weaker pound.”

Even so, he does not expect a sharp increase, given the rise in university places in Hong Kong and the falling birth rates among local residents.

Meanwhile, the cheaper pound was likely to attract more capital to the investment market in London, said Koh Keng-shing, Landscope Christie’s International Real Estate.

“But with the uncertainty over the terms of the new deal with the European Union, investors will take a longer time to digest,” said Koh.

He expects hotel, retail and office properties in prime locations will benefit the most while existing student housing will shine, given its high rental returns.

According to a report by JLL, there is just a mild correction, within 5 per cent, in property prices in some areas, in particular in the traditional prime central London areas where prices have soared over the past two to three years.

But emerging areas like East London had seen continuous growth in prices, the report said.

“With the pound having depreciated more than 10 per cent, we have seen more interest from overseas buyers,” said Mandy Wong, head of international residential at JLL.

She said footfalls at the company’s exhibitions after the summer holiday remained high with many first-time buyers.

“It is understood that the underlying economic fundamentals in Britain are solid in comparison to the previous downturns. The Brexit vote is merely a political shock, not economic,” Wong said in the report.

Additional reporting by Peggy Sito