Samir Salya discusses the continued Middle Eastern interest in London Property

The London property market has long been popular with investors around the world, but recent political turmoil has led to questions over the city’s future.

Despite this uncertainty, the capital remains the top city destination for Middle Eastern property investment. The UK and London have continued to be a pre-eminent market for global capital, with the decreasing value of the pound and its geographical position acting as incentives to foreign investors.

Political concerns

London’s property market has been hit by a string of concerns, namely the Brexit vote and instability of a minority government. This raised fears that that the pollical climate would tarnish the UK’s reputation and its image as a place of stability.

While the full extent of these concerns remains unclear, its current influence makes it a  favourable market for overseas investors. Assets are cheaper, as anyone using dollars, or currencies with a fixed exchange rate to the dollar, saw prices drop 18 per cent lower than they were two years ago.

Undeterred buyers

Due to this fall in price, investors are still attracted to the region, with its high demand, long leases and strong yields continuing to entice buyers.

Charles Penny, an associate at the London super prime team at Knight Frank, a real estate consultancy, recently told Forbes: “The incentive for Middle Eastern purchasers has sharpened in recent months, mostly due to the favourable currency swing.”

Elsewhere, Chris Brett, CBRE UK’s Head of International Markets, confirmed this positive reaction. “In the past year we have seen Middle East investors securing opportunistic acquisitions in the capital, most notably family wealth from ultra high-net worth individuals and sovereign wealth funds. Whilst this has partly been driven by a correction in yield levels and a favourable currency effect due to the depreciation of sterling, it reaffirms London’s status as a global gateway market.”

Continued spending

CBRE’s Middle East “In and Out 2017” report registered optimistic figures for the sector. Middle Eastern investors were shown to spend £1.28 billion on commercial property in London between the second quarter of 2016 and the second quarter of 2017.

Oil-rich sovereign wealth funds remained the top source of capital for Middle Eastern investments. This represented $5.4 billion of outbound investment from the region, out of a total $10.1 billion.

Top city destination

Middle Eastern investors, with long-term strategies and the means to respond to changes following the Brexit vote, will continue to put their money in the UK. Despite the recent unrest in the capital, London still remains a big draw for Middle Eastern buyers. While London may not be attracting the weight of capital that it did pre-2016, it is still attractive to the Middle East and remains the most popular region for investment.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings, and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.