Wealthy investors from the Gulf are increasingly looking to cities outside London when considering UK property investment.
Manchester, Birmingham and Liverpool regularly feature in recent client conversations, according to a report from AlRayan Bank, a Qatar-based Islamic bank with a UK presence in West London.
‘The London trophy asset or home is no longer the sole objective,’ AlRayan’s UK chief commercial officer in the UK, Maisam Fazal, wrote in the report.
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‘Our clients are pragmatically looking for income and long-term value as part of a considered portfolio. and that is drawing them beyond prime central London into Manchester, Birmingham, Liverpool and the well-connected towns around them.’
A report from the bank, based on responses from 150 HNW respondents with a minimum of £10 million in wealth, found that the average Gulf investor among its respondents expects to invest £78.3 million into UK property over the next five years.
This figure increased to £147.3 million when only respondents with £500 million or more were asked the question. The respondents were split evenly across Saudi Arabia, Qatar and the UAE, with 50 in each country.
While just over half of all respondents said they were planning new or increased investment in London property, other UK cities also featured prominently in the research. 34 per cent said they were also considering property investments in Liverpool, followed by Birmingham at 27 per cent, Manchester at 25 per cent, Bristol at 22 per cent and Cardiff at 18 per cent.
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[See also: Strong demand puts UK residential real estate in the investment spotlight]
AlRayan added that locations like Reading, Slough and Luton were also seeing increased interest, and that ‘affordability, commuting patterns and established communities’ were supporting demand.
Prime central London ‘continues to see interest’, the bank reported, but is facing pressure from regional investment opportunities in the UK – as well as competition from international cities.
The most popular response from Gulf investors considering to invest in London property within the next year on what made the capital city attractive, was the high quality of the city’s professional services sector.
The bank’s chief commercial officer in the UK, Maisam Fazal, said the UK was still a resilient market, with London remaining the number one destination for GCC property investment, but that the capital’s position ‘is no longer a given’ globally.
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‘Investors now compare the capital directly against New York, Singapore, Monaco and Dubai, and they are willing to look elsewhere when the numbers work better.
Fazal added that the UK ‘has work to do at a policy level’ to maintain its leading status with GCC investors: ‘To attract capital for housing, regeneration, and growth, investment and development must remain commercially viable. Planning, tax, build, and financing costs all affect delivery.’
Data from Savills in June this year found that London super-prime property sales were at their lowest number since before the pandemic, with the company’s director of residential research telling Spear’s: ‘Renewed caution has swept back into the super-prime London market following the start of the conflict in Iran.’
