London's property market has long been a popular choice for high-net-worth individuals from the Gulf Cooperation Council (GCC) countries. However, recent trends show that cash buyers are now turning their attention to the outskirts of the UK capital, seeking investment opportunities in suburban real estate.
A survey conducted by Al Rayan Bank, a shariah-compliant lender based in London, found that a third of GCC high-net-worth individuals surveyed had invested in London property over the past year, making it the most popular global market for these investors. The survey included 151 investors from Saudi Arabia, Qatar, and the UAE with an average net worth of $208 million.
London is seen as a reliable location for safe returns, with UK property being a favorite in GCC investor portfolios. While prime properties in prestigious areas like Mayfair and Belgravia continue to attract interest, developments on the outskirts of the city are also gaining popularity among investment buyers.
For example, we have reported a nearly 50% increase in GCC investors at our latest development, Sterling Place, in New Malden, southwest London. A quarter of these buyers are purchasing properties without borrowing, indicating a growing interest in cash investments.
Several factors have contributed to this shift in investment focus. These include high interest rates, increasing inflation, a rising cost-of-living crisis, and the conclusion of the UK government's Help to Buy scheme, which aimed to assist first-time buyers. These factors have resulted in accelerated rental rates in the capital, with London rents increasing by 6.2% since 2022, according to the Office of National Statistics.
The current market conditions have made debt-reliant investors cautious, creating opportunities for equity-backed investors to take advantage of reduced competition and stronger rental income. Savills Middle East predicts that Middle Eastern investors will invest $3.2 billion in the UK real estate market in 2024, drawn by increasing affordability and a growing interest in the student accommodation sector.
While many Middle East clients still prefer living in London, cash buyers are exploring opportunities outside the city for commercial needs or larger buy-to-let portfolios. The growing interest from Middle Eastern investors has also led to an increased demand for "last mile" financing from construction companies across the region.
In conclusion, London's suburban real estate market is attracting cash buyers from the Middle East, offering investment opportunities with the potential for strong rental income. As the city's property market evolves, these investors are diversifying their portfolios and capitalising on the growing affordability of properties outside central London.
Source: Arabian Business