UK courts Middle East investment as housing fundamentals stay strong

The UK is courting investment from the Middle East this week, as the country’s housing fundamentals stay strong in the face of Brexit uncertainty.

A government-led delegation of investors and developers will visit the event this week with the aim of wooing interest from the UAE. The two-day event takes place in Abu Dhabi on 25th April and Dubai on 26th April, with the delegation hoping to reinforce a relationship that already saw AED 15.1 billion ploughed into the UK from the Middle East in 2016.

The events are organised by global real estate publication EG, which is working with Clutons and the UK DiT.

EG Editor Damian Wild tells World Property Journal that the investor tour of the Gulf is taking place at an “exciting time”.

“The UK is at a significant moment in its recent history while the Middle East is one of the world’s most dynamic business environments,” he explains.

Delegates, led by former Deputy Mayor of London and chair of the government’s Homes and Communities Agency Sir Edward Lister, will be showcasing not just residential property but also commercial property and infrastructure projects too. Indeed, while Middle Eastern investors have historically shown a fondness for London’s residential market, the Qatari government’s investment portfolio in the UK also supports infrastructure investment.

“The Emirates have always been strong investors in the UK, not just in London, but throughout the country and we have always welcomed that investment,” says Lister, who emphasises the market’s stable fundamentals.

“In spite of Brexit, the lying property dynamics in the UK remain unchanged. The demand for all types of property is absolutely enormous. The UK government target for housing is 250,000 homes a year, and in a good year we are only achieving 170,000 so the pressure is on for housing across the country and we need with that modern office accommodation as well as industrial and distribution warehousing.”

“In a country where property is so well protected by rule of law, the UK always makes a sound investment,” he adds.

The UK will also be looking to find out more about cutting edge construction methods employed by developers in the Middle East that may be useful for the UK.


Brexit spells opportunity for investment, says UK property industry

27th January 2017

Brexit spells an opportunity for investment, the UK property industry has declared this week. As negotiations between the country and the European Union prepare to unfold, a range of bodies within the industry have emphasised the positives that could come out of the scenario.

The British Property Federation published a manifesto this week, highlighting five goals for the government’s negotiations: to maintain access to the right skills and talent, establish new trading relationships beyond the EU, maintain access to the EU market for goods service, create the conditions for a modern flexible economy, and to maintain business confidence to ensure continued investment in the UK.

Indeed, commercial real estate is one of the fundamental building blocks of
the UK’s economy, with the BPF noting its “key role to play in ensuring a positive future for the UK outside the EU”.

“Encompassing a vast range of essential economic and social infrastructure, it provides the professionally-managed rented homes in which many people live, the commercial space in which virtually all types of businesses operate and the shopping centres, restaurants, cinemas and more in which people spend leisure time,” notes the report, also highlighting the domestic and overseas capital that it attracts in the renewal of towns and cities.

At present, the market value of UK real estate is £1.6 trillion, representing 21 per cent of the UK’s total net wealth, while real estate contributes £94 billion annually to the UK economy – 5.4 per cent of GDP.

While the UK’s housing shortage is a key issue for the industry, with the BPF manifesto highlighting the reforms still needed in the planning system, it also emphasises the importance of a “fair, stable and predictable” tax system in stimulating investment in real estate.

The Property Industry Alliance has also highlights the improvements that Brexit could bring for tax, noting that VAT has previously been constrained by European law. Indeed, with foreign investors now owning 28 per cent of UK commercial property, excluding housing and student accommodation, there is potential to encourage further demand in the future.

“It is critical that we do not sit and wait to see what a post-Brexit world might look like,” Bill Hughes, chairman of the PIA, told Property Wire. “We have the chance to shape our real estate industry for the benefit of the UK.”

The comments arrive as all eyes are on the UK this week, with Prime Minister Theresa May heading to the US to become the first foreign leader to meet Donald Trump since his election as President of the United States.

American investors, though, do not need to be told about the opportunity that Brexit can offer: Properstar says that US buyers are already stepping up their investment in UK real estate, thanks to the attractive exchange rate between the dollar and the weaker pound.

“Following the election of Donald Trump, we have seen a steady rise in the number of US citizens searching for property abroad. Property searches, on all countries in our network from the US have gone up by 18 per cent over the past 30 days to 12th Jan compared with same period last year,” Shameem Golamny, MD of the firm, tells OPP.Today.

“Similarly to Brexit, experts predict for the political shakeup to continue to have an impact on the property market. Since the election, the top three destinations for US buyers are Canada (30 per cent), the UK (20 per cent) and Mexico (5 per cent), with most searches originating from California, Florida and New York.”

“It also seems the UK is doing a pretty good job of getting the message out that it is still open for business post the Brexit announcement,” he adds. “Apple is creating a new HQ at Battersea Power Station, Google has committed to new London offices and just this week Snapchat have announced they are opening their international HQ here. There’s a lot to draw workers and families to the UK for what might seem like a better life. With the exchange rate so favourable it might make the gamble slightly easier to take.”