Gulf investments in UK real estate will remain robust in 2024, pointing to continued dealmaking activity and the incoming ETA visa scheme facilitating travel
The UK’s resilient property market is poised to lure more Gulf capital in 2024. Image: Shutterstock
Investments in UK real estate from Gulf investors will remain strong in 2024, industry insiders told Arabian Business, citing recent deal activity and the incoming ETA visa scheme.
Despite signs of a slowing global economy and rising interest rates, investors from the GCC region continue to view UK real estate as an attractive long-term investment opportunity.
According to data compiled by real estate consultancy Knight Frank suggests that the 10-year average annual GCC investment into UK commercial property stands at around $3.4 billion. When including investment in UK residential assets, that figure would be larger still, Nicholas Spencer, Partner, UK Residential Sales at Knight Frank said.
“The GCC has always enjoyed a close affinity with the UK and London in particular,” Spencer told Arabian Business.
“While culture, history, retail and education all play their roles in attracting foreign investment, it’s the fact that the UK is generally perceived as a safe haven for investors, which is the key to its longevity and success.”
However, higher interest rates curbed demand for UK property last year, he added.
“Buyers seemingly held off in the hope that prices would fall. While transaction levels faded by approximately 10 percent, prices actually remained fairly resolute with only a 2.1 percent fall in Prime Central London.”
While higher interest rates affected demand for UK property in the past year, transaction levels decreased by approximately 10 percent, but prices remained resilient with only a 2.1 percent fall in Prime Central London
Spencer sees “more optimism” in the property market as its economy begins to settle and mortgage rates steadily become more attractive. But he cautioned that with a general election anticipated in the summer, it remains to be seen how long this window of opportunity will last.
This continued appetite is showcased by increased activity across all segments of the UK property market in recent months. Paul Simmons, co-founder and partner at investment manager Greenridge Capital LLP, said GCC-based investors have increased their allocation to UK real estate as they sought opportunities created by market distress.
GCC buyers drawn to GBP currency advantage
A key attraction for property investors from the Gulf remains the weakening of the British pound versus other major currencies like the US dollar. Since hitting a near 40-year low against the greenback earlier last year, the currency remains competitive for foreign buyers relative to the UAE dirham and Saudi riyal.
Louise Clarke, Group Head of Sustainability at Berkeley Group, said this currency advantage is empowering GCC investors to maximise returns from UK deals. She noted Berkeley has seen a “remarkable surge” in purchase inquiries from the region.
The appeal is “multifaceted,” Clarke said, with long-term capital appreciation prospects and attractive financing opportunities standing out as investors diversify portfolios globally. She sees the UK’s resilient property market as poised to lure more Gulf capital in 2024.
“The opportunity presented by the pound’s current position is not lost on investors, and the GCC region’s investors are well-poised to capitalise on these favourable market conditions,” she added.
While recent interest rate hikes may cool some property sectors, lower prices and select yield plays appear to still attract GCC interest. Spencer said prime central London prices fell just 2.1 percent in 2023, with values holding up better than expected given rising borrowing costs.
The weakening of the British pound against major currencies such as the US dollar continues to be a key attraction for property investors from the Gulf
Gulf investors becoming ‘more sophistiacted’
According to Paul Simmons, co-founder and Partner of Greenridge Investment Management, GCC investment in UK real estate increased significantly last year from 2022 levels.
“We have witnessed activity throughout the UK, and not just confined to Central London,” Simmons noted, highlighting the region’s growing sophistication and understanding of the diverse opportunities available across the country.
Prime market segments in particular have seen GCC investment grow over the past few years. While transaction volumes fell globally in 2023, Middle Eastern investors ramped up deals targeting higher-value properties.
“We think GCC investment into UK Commercial Real Estate market will continue to grow throughout 2024 and be more in line with the long-term trend – [circa] £2.5 billion – £3 billion,” said Simmons.
UK-GCC ETA visa scheme
The UK government’s launch earlier this year of a streamlined Electronic Travel Authorisation (ETA) visa scheme is also expected to support continued Gulf investment by removing bureaucracy for international travel and business visits to view assets. The ETA scheme which came into effect for Qatari nationals in 2023, will be extended to include nationals of Bahrain, Kuwait, Oman, United Arab Emirates, Saudi Arabia and Jordan starting February 1.
The ETA scheme was initially implemented for Qatari nationals in 2023 and will be extended to include nationals of Bahrain, Kuwait, Oman, the UAE, Saudi Arabia, and Jordan starting from February 1
While not a primary driver of deals, it removes one barrier, the experts said.
“The ETA scheme may add some assistance but won’t be the main thrust behind the majority of decision making,” said Simmons.
“The market will be awash with cheap deals throughout 2024, however as always, the devil is in the detail. Tread carefully, and make sure you have the right partners [or] advisors.”
The original version of this article was featured in Arabian Business Online.