Gulf states maintain healthy investment interest in UK property

on Feb 23, 2015

It has been reported that new research yet to be published by CBRE will reveal that the total capital investment into UK property by Gulf states topped £2 billion in 2014. This amounts to over 10 percent of the total £17 billion of direct international capital flows which made their way into the UK real estate market, primarily ending up in London based properties.

Of the £2 billion, nearly half came from Qatar in the form of both sovereign and private investor funds. Investments from Qatar totalled nearly £1 billion in 2014 following some major acquisitions such as Qatar’s sovereign wealth fund purchasing the international headquarters of HSBC. A further significant purchase was made by Canadian and Qatari fund manager Brookfield Property Partners, which purchased Songbird Estates, the Canary Wharf property group, earlier this year.

Abu Dhabi Financial Group led the second largest investment from the gulf region with its acquisition of Scotland Yard for £370 million, while the Abu Dhabi Investment Authority bought a £200 million stake in Fizzy Living, a private rental property portal.
In contrast, for 2014, Saudi Arabia accounted for less than 10 percent of investment flows from the gulf, while Kuwait accounted for five percent.

Though investment from the gulf is by no means insignificant, CBRE noted that Middle East based vendors accounted for less than two percent of all vendors dealing in central London real estate last year. CBRE suggested that this was due to the tendency of investors from the Middle East to hold on to their assets for longer periods than many other vendors, allowing their investments to mature rather than ‘flipping’ them for fast profit.
Speaking to Arabian Business, CBRE executive director Chris Brett said that it is likely that investment from the Middle East will diminish somewhat throughout 2015 due to falling oil prices
“There appears to be a potential trend towards Middle Eastern countries lowering allocations of capital for real estate,” he said. “There also appears to be a shift towards private capital, rather than sovereign wealth funds, making most of the investments

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