Staff Report
Dubai, UAE
The commercial property market in the UK is set to see increase in investment from the GCC, with an anticipated value exceeding US$4 billion (Dh14.69 billion) annually. The growth is attributed to Gulf nationals’ investment interest in the living sector, including retirement living, private rental schemes, co-living, and purpose-built student accommodation. The Bank of London and The Middle East (BLME), a Sharia’a compliant bank based in London has revealed findings tracking GCC investment into UK real estate in its latest report, Opening the Door: Is the UK’s property sector about to get an influx of investment from the Gulf?, based on the interviews with industry experts.
Among them, 87 percent found falling interests rates in the UK would be a key driver of GCC investor appetite over the next 12 months.
Johan Eriksson, Managing Partner of Oryx Real Estate Partners, said, “The prospect of interest rate cuts along with a more appealing entry point and continued rental growth will attract GCC investors to the UK market.”
Moreover, falling inflation and lower property prices in some segments of the market would create an opportunity for GCC investors ready to deploy their capital. Other factors deduced by the experts include purchasing assets and enhancing them to meet the UK’s new environmental requirements and sell them at a profit. Today, there is a sales price premium of between 8-18 percent for green-rated buildings compared to equivalent buildings without a Building Research Establishment Environmental Assessment Method (BREEAM) rating.
Rashid Khan-Gandapur, Director, Real Estate Finance at BLME, said, “We anticipate investors from the GCC will look to the UK to diversify their portfolios, and they will see profitable opportunities to invest and improve existing building stock including the enhancing the ESG credentials as a driver of value. Investment in UK commercial properties as a whole is expected to grow to over US$4bn annually. This figure will be boosted further by investment in the residential sector, with GCC investors showing a growing appetite for undertaking large scale living sector investments.”
Purpose-built student accommodation in particular is a popular asset for investors, with 68 percent of experts saying their clients were focused on the sector, because of the structural shortfall and low tenant failure rates. The UK remains a popular choice for students from GCC with a record number of UAE residents applying to UK universities. Recent data from the Higher Education Statistics Agency (HESA) shows that more than 8,000 are studying in British institutions – almost twice as many as compared to five years ago.
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Also read: Middle Eastern investment in UK real estate to grow 36% in 2024
