Middle East Investors Drawn towards Global Real Estate Assets

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  • Savills identifies Middle East as only region to see outbound investment in real estate increase
  • US$8.9 billion crossed borders in H1 2019 – an increase of 62% compared with H1 2018
  • London top global city for cross border investment into real estate in 2018

Arab buyers confident in UK fundamentals and identify significant buying opportunity due to devaluation of Sterling and comparably lower residential property prices

Middle East investment in global real estate is growing faster than any other region. The world’s leading real estate advisor, Savills, revealed outbound investment in real estate from the Middle East region grew by 62% in the first half of 2019. This market insight was shared on the eve of Cityscape Global, the world’s largest exhibition and conference on property development, which is being held over three days in Dubai.

Steven Morgan, Savills’ CEO Middle East said: “Middle East investors are increasingly drawn towards global real estate assets as long-term investments. That interest has translated into a sharp increase in cross-border transactions, particularly into mature global destinations such as Northern Europe and North America.”

As capital flows across borders, London has traditionally held the top spot as the most popular city for global investors, keen to take advantage of currency exchange rates. Savills identified that a £5m investment into prime central London real estate would effectively cost 40% less today than 5 years ago (pre-tax). The UK as a whole is the most popular country for capital investment, followed by Germany.

“London leads the way for cross border investment into real estate. Our research indicates London is the third most resilient city in the world, so while there is undoubtedly some volatility around Brexit, the underlying strength of the UK capital as a global business hub means it will remain a powerhouse. Average prime central London prices are around 20% lower than five years ago and combined with current dollar-pound exchange rates, Middle East investors are already taking advantage of very favourable terms with a view on the medium to long term fundamentals of the London market.”

Savills predicts prime London residential property values will recover in a post-Brexit scenario, potentially increasing by 12.4% over the next 5 years. UK GDP is set to grow steadily, with an increase of 27% between 2019 and 2029. London will be one of the prime beneficiaries, as it is responsible for approximately a quarter of all of the UK’s economic output. Major global companies are incentivized to locate in the UK capital, with Google putting £1bn of investment into a new King’s Cross HQ which will generate 3,000 jobs by 2020 and Apple is creating another 1,400 jobs to fill its new world-class hub at Battersea Power Station HQ.

As companies invest into London, so too are developers, who are offering increasingly attractive opportunities.

Trending Investment Opportunities in London

· King’s Road Park – developed by St. William, Berkeley Group, this multi-phase new development hosts top of the range facilities including two in-house cinemas, 25m swimming pool, gym, spa, and golf simulator

· Grand Union – developed by St George PLC, Berkeley Group, this new canalside residence in Alperton is set amongst 11 acres of public green spaces including landscaped gardens and waterside walks.

· Battersea Power Station – this Thames-side mixed-use development has transformed an iconic Art Deco masterpiece into a fully functioning, thriving community with a range of apartment and penthouse options.

· Triptych Bankside – Near to Shakespeare’s Globe Theatre and The Shard, this residential scheme is developed by Sons & Co JTRE and is within easy commuting distance to The City of London.

Top Global Cities for Cross Border Real Estate Investment:

· London

· New York

· Paris

· Hong Kong

· Amsterdam

On a global scale, 2018 was the most active year ever in real estate, with over US$1.8 trillion invested worldwide. Volumes slowed in the first quarter of 2019 due to political and economic uncertainty, however activity rallied in Q2, with transactional volumes now only slightly behind year-on-year.

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