That Expat Life: Will London still call Gulf investors after Brexit?

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Making investment decisions can be hard for anyone, but more so for expats, especially at times of regional or political unrest. Investing abroad can be one exciting option, offering opportunity for travel and sometimes a residence.

GCC nationals and residents continue to explore the global real estate market as an investment opportunity, despite uncertainties prevailing in a number of popular investment destinations, both east and west of the globe, from Brexit to unrest in Hong Kong. Yet the UK has remained one of the strong global markets to attract investment from the Middle East, considering  the benefits its commercial markets grant investors: sector size, availability of high-quality assets and transparency. 

2018 witnessed a brief drop, as investors from the Gulf showed only 67% preference towards the UK compared to 81% in the previous year, with countries like the US, Germany, the Netherlands and Spain coming into the mix. Yet in 2019, over two-thirds of GCC’s investment in the UK was in its real estate sector.

But now that Brexit is a definite reality, and the British Pound is expected to further recover, will the property market in London regain its spark? 

I sat down with Andrew Jones, the International Director at Battersea Power Station Development Company, where Apple is expected to set up its London headquarters, to chat about the appeal of the UK property market to Gulf investors after Brexit.

The recovery and stabilization of the property market in 2019, along with the general elections in December have revived investors’ confidence, and brought back a shared focus on the future of the UK. 

While it might be too early to get the full data on the property market performance in 2019, Jones gave us a glimpse of the year’s results for Battersea Power Station Development, which achieved a ￡120 million worth of sales of residential investments, a third of that came from the GCC. 

The main drivers for GCC nationals and residents to invest in the UK are government stability, the ease of doing business, location between time zones and, what Jones sees a popular reason for global investors to choose the UK: education.

“Education continues to be a significant driver of investment, from the GCC and the rest of the world. The education system of the UK, namely its schools and universities, are by large the best in the world.

People from the GCC are not only buying residential units for themselves or for their children to use when they’re at university, they’re also looking at other areas of business,” he added.

The 2020 outlook

Now that “the logjam has been broken” as Jones put it, an increase in trade and churn in the domestic market is expected, and in turn, this will drive further investments from the GCC into the UK, especially London.

“Brexit was a key element for not doing something, that has now very much been cleared. The confidence has come back to the market generally. UK and Arab banks operating in London are keen to lend money and increase loan-to-value. Banks are now in lending mode, and they appear to have a robust and positive outlook for London real estate at the moment,” he said.

As the property market goes, it’s all about supply and demand, there is a continuous supply, despite regular restrictions of a low-built city like London. Will demand grow after Brexit? Signs are pointing to a yes, if the conditions of safety and stability keep on improving. 

What about you, is investing in London’s property market part of your expat plans? Join the conversation in the comments below, and share what you’d like to read about next.