Gulf state investors are preparing to spend £2.5bn on UK real estate next year.
Research by the Bank of London and the Middle East predicted that Gulf Cooperation Council states’ investment would ramp up as property prices continue to fall.
BLME, one of Europe’s largest Sharia-compliant Islamic banks, said residential and commercial property across the UK was looking particularly attractive, following a year of challenging macroeconomic conditions, defined by the highest interest rates since the global financial crisis.
GCC investors are capitalising on lower property valuations, with investment experts anticipating they will refinance when interest rates start falling.
Its new report, Strong Foundations, stated that strong Gulf economies needed to expand asset diversification, and were focusing on favoured asset classes, such as purpose-built student accommodation.
BLME’s advisers predicted that PBSA would see the largest increase in investment from GCC investors.
It added that, while London remained the city of choice for investors, regional cities were becoming increasingly attractive.
Manchester, Birmingham, Newcastle and Bristol were highlighted as popular investment locations by the bank’s clients, with Gulf investor preferences also shaped by globally recognised cultural assets such as the Premier League.
Andy Thomson, head of real estate finance and investments at BLME, said: “For GCC investors, the UK remains an attractive prospect in spite of geopolitical and economic uncertainties. With a perfect storm of strong dollar-pegged GCC currencies, surplus cash following last year’s oil boom, and falling UK asset prices, investors in the Middle East have a golden opportunity to spot a bargain while property prices are low, with the option to refinance when interest rates fall. UK-based advisers can provide crucial insights on tenant quality and asset locations, and can pinpoint opportunities for investors to add value.”
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