Which city remains Middle East’s favorite for real estate investment?
Middle East investors have always been interested in the real estate market of the British city of London, but lately the investment has seen a dramatic upsurge.
According to market reports, billions have been poured in by regional investors in commercial as well as luxury residential properties in London and other cities of the UK, lately. Industry pundits are crediting this sudden surge of interest to various factors ranging from weak pound, falling property prices and disturbed geopolitical conditions in the region.
Buying a prestigious address
Affirming the inclination, Jasim Siddiqi, Chief Executive Officer of the Abu Dhabi Financial Group (ADFG) that invests with a rate of 30 to 40 percent in London, told TRENDS, “London real estate market is very important segment, and it is considered one of the best, strongest and most prestigious real estate markets in the world.”
Reflecting the positive sentiment of investors, ADFG, with its acquired real-estate developing company Northacare, recently announced one of the most noteworthy projects in London named The Broadway.
Talking about this investment, Siddiqi said, “When we announced launching The Broadway project in the Middle East, we had an outstanding response. The project is one of the largest projects in central London, and located in one of the most distinguished sites in the UK capital.”
The project is an approximately one and half billion sterling pound and has already started sales in the Asian market.
Luxury remains the focus
Bespoke property services agent Rokstone has also registered a significant rise in enquiries and sales from Middle East buyers, with a 30 percent rise in the last few months. Also, the Gulf investors’ focus on luxury properties is evident in the fact that major chunk of this investment is done in the ‘platinum triangle’ of Knightsbridge, Belgravia and Mayfair.
Rokstone has also highlighted that more than 70 percent of the Middle East buyers only purchase properties that are located within the 10 to 15 minutes of walk from Harrods, the luxury department store in London’s Knightsbridge neighborhood.
Highlighting the most important elements that distinguish the Middle Eastern real estate investment in UK, Siddiqi said, “Generally speaking, the most important elements that characterize real estate investment in UK is the low rate of sterling pound against GCC currencies. Therefore, investment in UK is generally worthwhile, not for this project (The Broadway) only. It is worthwhile investment in terms of currency rate.”
Meanwhile, industry experts maintained that demand in London real estate is also fueled by the disturbed political and economic scenario in the Middle East region. Rokstone has observed a 20 percent rise in enquiries coming from Qatar, 15 percent surge in interest from Bahrain investors while up to five percent from Yemen in the last few months.
According to a latest research from global property advisor Knight Frank, London real estate market experienced a 33 percent increase in transactional volumes in 2017 reaching £17 billion, with 83 percent (£14.2 billion) coming from the overseas capital.
The research underlines, “This includes investments from 15 different nationalities in Central London’s commercial market with Middle East investors accounting for eight percent of commercial transactions (£1.3 billion).”
“Knight Frank’s Capital Markets Team are currently monitoring £46.1 billion of active capital looking to invest in London this year; up 11 percent from the £41.5 billion at the same point last year. This money remains dominated by requirements from Greater China, but also shows a substantial interest from other Asian markets including the Middle East,” said Joseph Morris, Head of Capital Markets, Middle East at Knight Frank, in one of his recent press statements.
Subtle shift to neighboring cities
The 2018 Global Real Estate Outlook Report (GREO Report), by IP Global, stated that while London has long attracted property investors from the Middle East, regional cities in the UK and cities within the Central Europe are now offering a compelling global investment choice.
Richard Bradstock, Director and Head of the Middle East at IP Global, stated, “Over the years we have seen that, historically, investors from the Middle East have favored buying property in London. However, in 2017, we witnessed a behavior shift as many investors are flocking to buy more affordable property in northern cities like Manchester, Liverpool and Leeds, which offer high rental yields and rising house prices.”
“Internationally, with the launch of startups and technology hubs, central European cities like Berlin, Frankfurt and Lisbon have become attractive investment destinations due to their resulting strong capital growth and sound economic performance.”
Knight Frank Middle East, the world’s leading independent property consultancy, has recently announced a new phase of sales for the waterside property development, Chelsea Creek, London. The development was showcased during a series of private sales events across the Middle East, showcasing the prime real estate development to Knight Frank’s Middle East property clients as well as disclosing findings from the Knight Frank Wealth Report.
Tom Hawkins, Partner, Head of International Project Marketing Middle East, Knight Frank, said, “The last 15 years has seen intense regeneration come to fruition and the market appetite remains robust. With the limitations of expansion within central London, areas open to regeneration remain exceptionally rare and this site represents a key marker in the London property market.
However, London retains its charm. Currency fluctuations, local regulation initiatives and a good RoIs (return on investments) remain some of the main reasons why Middle East has renewed and strong opinion about London as a city to invest. As the current reports show, this trend is expected to continue for the rest of the year.
This article first appeared in AMEinfo’s sister publication TRENDS.