Where are Property Investors in the Middle East targeting for returns?

In recent years outbound investment from Sovereign Wealth in the Middle East has reduced, however private capital and small institutions continue to invest abroad.  According to property consultants Knight Frank, more than two thirds of capital from GCC countries is invested in the UK Property market despite the current confusion over the political landscape. The UK has been a popular investment destination for more than a decade because of the quality of investment options and the transparency in the market.

Many institutional transactions from the Middle East focus on the USA and while London remains the popular choice amongst private investors, the lure of impressive returns and capital growth is attracting more and more investors to explore the UK’s northern cities. In 2008, Middle East investors contributed $2.7bn to the UK real estate market.

According to Savills, while property prices have fallen in London by 2.5% in the last 12 months, they have increased by 4% in the Northwest in areas such as Manchester and Liverpool. While land registry data suggests that in the five years up to June 2018 Liverpool’s average property price increased by 19.34% those Manchester prices increased by 47.76% over the same period of time.

The northwest also offers attractive yields, with the average Long term rental yield for properties in the UK at 4.5% while landlords in Liverpool and Manchester are achieving very impressive 8.3% and 6.5% respectively.

Knight Frank went as far as to state that in the first half of 2019 the Middle East saw $8.9 bn in investment in to foreign Real Estate, a huge increase driven by the investment opportunities in the UK and the beneficial exchange rates for UAE investors.

Savills on the other hand state that “Average prime central London prices are around 20 per cent lower than five years ago and combined with current dollar-pound exchange rates” and foresee prime London property values recovering up to 12.4% in the next 5 years.

With UK GDP predicted to grow steadily over the next ten years, attractive opportunities in the UK property market are set to continue.

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