The announcement of the Brexit vote decision caused a worldwide ripple; before the referendum held in June 2016, many economists produced gloomy forecasts. UK removing itself from the European Union caused instantaneous global disruptions and financial market volatility. The economy took a swift blow almost immediately upon the announcement. Markets dropped rapidly and the pound hit a 31-year low against the greenback.
Then almost three weeks into the new year and the UK economy seems to be in rude health; forecasts seems to be wrong.
However, the UK has not actually left the EU yet – the real change may only happen once it does. The current uncertainty, ahead of talks between the UK and the rest of the EU, over what form Brexit will take is an issue for many firms when it comes to investment planning. Certain regions of the world are holding their collective breath in anticipation as they wait to see how everything pans out. This is largely due to the potential economic ramifications they will experience as a result of the move.
Dubai is among these regions, especially within the real estate arena considering that British investors are the third largest investors in the emirate’s property market.
The fall in sterling against the dirham gives people the opportunity to make overpayments to their mortgage in UK, as their dirhams now go further when converted into sterling. Essentially, for those who have considered purchasing property in the UK, this asset has become substantially cheaper.
The pound is forecast to fall another five percent against the US dollar by the end of the year; and we remind you that AED (UAE dirham) and US dollar are in a constant relationship of Dh3.67 per US dollar. so we are likely to see an even lower level of sales to UK nationals in the short term. But there is no guarantee that further Brexit policy decisions will result in further falls, or whether it will come back against the dirham.
In any case UK nationals may decide “to setup business in dirham” (maybe in a Free Zone) in order to have a dirham/usd related business. And with a Free Zone company they can have it with a fairly low investment.