What's going on?

In one of London�s biggest real estate deals ever, a Chinese company has paid over �1 billion for the skyscraper affectionately called �the Cheesegrater!� (tweet this)

What does this mean?

The huge sale of the office tower, located in the heart of London�s financial district, comes at a time when there are fears that many of London�s financial services jobs will move to cities within the European Union due to Britain leaving the EU. There are also signs that the market for rental office space has softened. But, for non-UK investors, British property has cheapened significantly as the pound has declined almost 20% versus the US dollar (and many other currencies) over the past year, largely due to the Brexit vote.

Why should I care?

For you personally: Low interest rates push up the value of most investments, including property.

Interest rates on government bonds have been at historically low levels in most major economies since the 2008 financial crisis. This makes other investments relatively more attractive: if investors get paid virtually zero interest on government bonds, they are more likely to purchase riskier investments that offer higher returns. Such investments include commercial property as well as residential housing. If interest rates were to rise substantially, it would threaten the value of such investments.


The bigger picture: The weak pound has helped cushion Brexit�s blow.

The pound fell sharply in value following the Brexit vote partly because investors were scared that the UK and, especially London, would be a less attractive place to do business. However, the much weaker pound has enticed others to invest in Britain, e.g. by buying property. In a sense, the weak currency cushions the blow a bit.