There has been much discussion over the past few years about the UK’s wealth industry’s large-scale move to the Middle East, in particular the United Arab Emirates, Qatar and other Gulf countries. But it is not all one-way traffic.
Middle East investors are actively targeting the UK industrial and logistics sector, attracted to strong occupier demand and income growth prospects.
This year has seen a boom in investment already outpacing 2024 by 1000 per cent, according to Knight Frank’s figures. So far, a total of £245 million has been invested into UK commercial real estate (CRE) from Middle East private investors (UHNWs & family offices), compared to £25 million in total volumes recorded in 2024.
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Despite headwinds, global investors increasingly see the UK logistics sector, which gained momentum from the online shopping boom, as fertile ground for high-yield opportunities, citing ‘superior liquidity, more defensive valuations, and greater economic resilience relative to other geographies’ as draws to investing in Britain.
As Nik Potter, UK capital markets research associate at Knight Frank, told Spear’s: ‘Where institutional capital was constrained by a shifting macroeconomic climate and higher costs of capital over the past few years, private capital has been able to act more opportunistically and take advantage of diverse capital streams.’
Best opportunity since GFC
One fund betting big is Oryx Real Estate Partners, which closed its first UK logistics development fund at over £100 million, with backing from two cornerstone institutional investors, including Middle East family office AlRajhi Partners.
The sector offers an attractive entry point following sharp value corrections, Oryx co-founder Johan Eriksson tells Spear’s. Investors see the mismatch between investment pricing and rental growth as an opportunity, Eriksson says, while higher yields and continued tenant demand have created attractive conditions.
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‘We see this as one of the most attractive entry points since the global financial crisis,’ he says.
Offices have faced challenges from hybrid working, but Eriksson says that prime, well-located buildings remain scarce and highly sought after, while retail investors are making a cautious comeback.
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‘Retail has been hit hard by e-commerce, but investors are returning to areas like retail parks and prime high streets.’
Fawaz AlRajhi, chairman of Oryx, said the correction in land values and the continued potential for rental growth meant the UK industrial and logistics sector remained one of he company’s ‘high conviction sectors’.
‘Stabilising construction costs and interest rates support the delivery of healthy returns, and motivated sellers and developers have enabled us to secure a strong pipeline of assets,’ he said.
Oryx has lined up a ready-to-go pipeline of sites. The fund is targeting a net IRR of approximately 18 per cent, with a focused development strategy aimed at four to five projects across undersupplied logistics submarkets in the UK, including 15-acre plots, high-spec industrial builds and excellent transport links.
Why the UK and why now?
Despite increasing tax pressures, London remains attractive to global investors, thanks to its stable legal system, strong property rights, transparent regulation and global connectivity: the capital was the top metro destination for cross-border investment in 2024, Knight Frank’s 2025 Wealth Report found, attracting a total of US$9.6 billion.
Mark Gauguier, partner at Farrer & Co, told Spear’s that the current market conditions were ‘just right’ to attract the attention of Middle East investors.
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‘Middle Eastern investors have the money to tend to European infrastructure’s myriad needs and, while there is a greater drive to invest in the GCC than previously, the perception is that this part of the UK market is ripe for substantial returns on investment.’
Eriksson tells Spear’s that Middle Eastern investors see the UK as attractive thanks to its ‘trusted legal system, deep pool of professional advisers, and long-established reputation as an investment destination.
‘Relative to the EU, the UK offers compelling economics, while cultural and educational ties reinforce its safe-haven status,’ he says.
But, Gauguier adds, where Middle Eastern investors deploy capital has changed.
‘Where once these investors were out to buy themselves trophies, they are now looking for yield and profit, even if that means investing away from the haven of London.
‘Indeed, the draw of logistics and industrial investment, often a long way from the traditional south eastern geographical comfort zone, is stronger than before and, for now at least, the feeling is that there is value to be had in what is seen as a simple and safe asset class – and one where more, not less, is needed.’
Investors are looking beyond London, but selectively, Eriksson says. In logistics, demand is strongest in the ‘Golden Triangle’ and around major cities. For offices, investors are focusing on regional hubs like Manchester, Birmingham, Leeds and Bristol, where strong economies, infrastructure and universities underpin tenant demand. Appetite outside these hubs is limited.
Knight Frank’s data found that while London remains the most active market, with 47 per cent of all investment since 2021, there has been an uptick in investment in the southeast of England (29 per cent) and Greater Manchester (27 per cent).
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What returns are investors looking for?
Eriksson says that for income-driven investments, a cash yield above 7 per cent is generally seen as attractive. For development or value-add projects, investors often target around 15 per cent annualised returns.
Of the assets targeted by Middle East investors since 2021, 55 per cent are offices, 29 per cent hotels and 10 per cent retail, Potter says.
Eriksson tells Spear’s that some Middle Eastern family offices prefer to own assets directly, which gives them control but also requires local knowledge, staff on the ground and cash ready to deploy. Others choose to invest through managers like Oryx, either via funds, clubs or tailored accounts.
And while they follow investment themes, they remain opportunistic, weighing each deal on its risk and reward, he says.
‘Our view is that the market is at or near its low point, and that disciplined stock selection, cautious leverage, and longer holds will reward investors in this vintage,’ he says.
