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Oxley gives assurance over Brexit's impact on its UK exposure
SINGAPORE-LISTED property developer Oxley Holdings on Tuesday commented on the implications Brexit will have on its UK business.
For its London exposure, the group has the Royal Wharf Project, a 363,000-square-metre waterfront township development in East London; a 20 per cent stake in UK property developer Galliard; and a plot of land at Deanston Wharf, where development has not started yet.
Oxley said it expects limited impact on currency conversion from the British pound (GBP) to the Singapore dollar (SGD) as it uses a natural hedge on currency fluctuation by having both the cost of construction and bank loans settled in GBP.
The cost of construction for the Royal Wharf Project is booked in GBP and the collection of buyers' deposits and follow-on payments are also in GBP. A significant portion of the bank loans pertaining to the Royal Wharf Project is also in GBP.
"As the cost of construction and the bank loans will both be set off against the revenue in the same currency, the depreciation of GBP on the group's revenue in SGD terms will be substantially mitigated, and the impact will only be shown in the profit portion," it said.
It added that the depreciation of the GBP is also expected to generate more purchasing demand in the UK market, and the group has received more enquiries from potential overseas buyers since the Brexit result was announced.
Oxley has thus decided to emphasise its sales and marketing efforts more in the Middle East and Asia markets.
There will also be an indirect benefit to business in Ireland. Oxley has an upcoming project in Dublin, expected to be launched in 2016-2017. The site of 2.35 hectares will be developed into a 60,000-sq-m Grade A office and over 200 apartments.
"As an increasing number of financial institutions are considering setting up office in Dublin, the group's business outlook in Dublin is expected to improve further," Oxley said.
Executive chairman and CEO Ching Chiat Kwong said: "Other than some exchange difference, we see the impact is overall minimum and manageable to Oxley. We are on track to deliver the completed units to the buyers of Royal Wharf Phase One over the next 12 months, and we perceive minimal completion risk. Our long-term growth plan in the UK will remain unchanged."
For more coverage of the EU referendum, visit bt.sg/BrexiT