According to some reports, London may be losing its haven status among foreign property investors, as slumping commodity prices and turmoil in the emerging markets decrease the demand for property. But the indicators for this reported loss of haven status are not exceptionally strong, and Middle Eastern investors have shown little sign of scaling back their interest in the city’s property market. According to research by CBRE, the level of potential spending by sovereign wealth funds on real estate developments and opportunities in central London dropped by 2 billion GBP between May and November 2015. While this is a significant reduction, potential spending still stands at 16 billion GBP – by no means chump change.
The love affair between Middle Eastern investors and the home of Big Ben has been well established through global real estate market reports and survey results. Year after year, this data shows that Middle Eastern investors prefer London over any other city in the UK, and largely prefer the UK over any other country in Europe. Of the total 14.1 billion USD that Middle Eastern buyers spent on overseas property in 2014, 32 percent was spent in London. In 2015, CBRE estimated that Middle Eastern buyers could account for 25 to 30 percent of home sales in London.
As recently as last week, reports were emerging of investors from the Middle East making offers on property in London. This includes an offer by a private Middle Eastern investor to buy Kinnaird House near Pall Mall for an estimated 85 million GBP (120 million USD).
Qatari investors have historically been the main players in the Middle East in terms of overseas investments across various sectors, including real estate. In 2014, Qatari entities invested an estimated 1.3 billion USD in London through major acquisitions, including the London headquarters of HSBC, major stakes in the Shard and in Harrods, and the purchase of the Canary Wharf estate. According to a recent study by GeoPhy, Qatari entities own 28 percent of London’s 15 most valuable skyscrapers. This is higher than the combined proportion owned by all UK companies, which currently stands at 21 percent.
According to Adam Chalice, head of UK residential development at Jones Lang LaSalle, this may be the ideal time to buy property in the city. “If you’re a buyer from a Middle Eastern country, say Qatar, this is a great opportunity, because the exchange rates make it a really good time to buy.” He believes that the strong fundamentals of the London property market and its status as a top financial centre contribute to its enduring appeal. The cumulative growth of London residential prices has been forecast at 22 percent between 2015 and 2019, with the understanding that demand will continue to exceed supply.
Naseba is a multinational business facilitation company with 14 years of experience in regional deal facilitation. Our investor introduction division has successfully built and leveraged a network of contacts in the GCC. These contacts include institutional investors, high net worth individuals and members of royalty. Our investor analysts speak with investors on a daily basis to understand their needs and mandates, and the most recent results of these research calls indicate that investors are seeking to divest from the Middle East into core assets in prime markets.
In April 2016, Naseba will be organising an international Real Estate Investors Meeting in Doha, Qatar. At the meeting, pre-qualified real estate investment opportunities from around the world will be introduced to liquid investors from the Gulf region.
To submit your business case and register for the meeting, click here.
For more information contact:
Head Business Analyst
UAE: +971 4455 7954
USA: +1 773 840 6166