UK eyes return of Middle East investors in 2021

* The virus outbreak and falling oil prices led to a decline last year in outbound global commercial real estate investment in the Middle East
* COVID-19 and travel restrictions in the region had a significant effect on UK commercial real estate levels

Published 08 Jan,2021 via Arab News - Economy JEDDAH - Middle Eastern investment in the UK has always been active, and despite the economic turmoil brought about by the coronavirus disease (COVID-19) pandemic, British real estate companies reported a noticeable rise in buyer interest in June and July.

The virus outbreak and falling oil prices led to a decline last year in outbound global commercial real estate investment in the Middle East.

COVID-19 and travel restrictions in the region had a significant effect on UK commercial real estate levels, with a total of £32 million ($43 million) in second-quarter (Q2) investment from the region, its lowest level since Q3 2010.

Alex James, head of private client advisory, private office commercial at Knight Frank, said with the opening of the borders between the UK, the UAE, and Bahrain in November, real estate demands from investors would increase.

“Travelers arriving in the UK from these countries will no longer have to quarantine for two weeks, promoting opportunities for investors for when the current UK lockdown restrictions are removed.

“We estimate that the year-end total transaction volume for Middle East capital into the UK is around £1.4 billion, down 6 percent on last year. The recent recovery in transactions seen in Q3 will unfortunately not continue into the normal final quarter rally as long income and distressed investment opportunities remain scarce,” he added.

James said depending on further lockdown measures, he expected that real estate investment would see a recovery in 2021 in volumes to £1.6 billion, representing an annual rise of 14 percent.

A recent example of Middle Eastern investment in the UK was The London Resort. The high-profile $2.6 billion theme-park development, funded by Kuwaiti money, has proven popular in the Gulf Cooperation Council and the UK with Middle Eastern investors.

The London Resort was launched in October 2012 by London Resort Co. Holdings and is supported by the Kuwaiti European Holding Group.

In a previous interview with Arab News, James Hayward, investment director at London-based investment brokerage Farrbury Capital Partners, said although British investment from locals was active, many of them were of Middle Eastern descent.

“We market globally. We still have healthy investment in the UK, although I would also say those who invest from the UK have been predominantly of Middle Eastern descent. It is very, very popular in this neck of the woods. So that is predominantly where we are seeing investment coming from,” he added.

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