The UK real estate market is expected to receive Dh11.7 billion in investment this year, a large part of which is likely to come from the GCC, a study shows.
According to Select Property, a leading UK-based property developer and investment partner, investors from Saudi Arabia are increasingly pursuing capital appreciation to generate rental income and diversify their investment portfolios.
According to Adam Price, CEO of Select Property, despite global uncertainties, a visa waiver for GCC nationals to visit the UK is making property viewings, real estate transactions, and mortgages more accessible for Middle Eastern investors in the UK. Survey results released by the firm last month showed that 73 per cent of Saudi investors have considered investing in UK property, 75 per cent are eyeing Birmingham or Manchester, and 65 per cent view real estate as their preferred investment strategy.
For instance, the West Midlands economy, which houses several boroughs including Birmingham, is anticipated to see its economy expand by Dh46 billion over the next five years. Major regeneration projects like the HS2 high-speed rail project are playing a starring role. Price explained: “GCC investors who lock eyes with the allure of UK real estate are often keen to capitalise on rental income, the city’s well-known economic opportunities, or both. HS2 is improving the city’s connectivity and elevating its stature as a commercial hub to boost its property values while making great educational facilities, job prospects, and affordable housing accessible to benefit homeowners and investors alike.”
The number of GCC students in the UK is poised to continue rising as over 8,000 UAE students currently study in the UK, nearly double the number from five years ago. Select Property has similarly seen an uptick in inquiries for their services from Saudi investors pursuing educational opportunities in Birmingham, one of the top cities for investors given its reputation as the largest centre of higher education in the UK.
Beyond this, the surge in GCC investment interest in the UK is amplified due to a reduction in interest rates and lower property prices in certain market segments. Market data from BLME shows a notable 87 per cent of GCC interviewees citing falling interest rates as a key influence in their investment decisions in 2024. Branded residences have particularly been a focus for KSA investors, driven by their preference for high-quality, well-managed properties that offer prestige and reliable returns. With 69 per cent of Saudi households aiming to own a branded property, and this type of residence being accompanied by top-tier amenities in prime locations, many have looked to the UK to realise this vision via secondary investment.
Price added: “Supply shortages are positioning the UK’s real estate sector as an attractive option for discerning investors seeking stable returns and long-term growth. Rental yields ranging from 6.6 per cent to 8 per cent make cities like Birmingham demonstrate its potential for strong ROI. Savvy investors who enter the market now, especially while interest rates drop and new developments rise, will be well-positioned to capitalise on an ideal scenario for buy-to-let investments. Based on our recent interactions, KSA investors are keen on expanding their investment wallet and we are witnessing this in increasing numbers lately, especially in the branded residences segment.”