Saudi investors bullish on UK property despite Brexit impact

Investing in overseas property has always seemed attractive to GCC investors. Industry analysts are of the opinion that Britain, particularly London, has been an investment magnet for regional investors for decades, especially from a higher education and leisure perspective.

Although the Brexit deadline is now just months away, the appeal of UK property to long-term investors in Saudi Arabia is unlikely to change.

According to the recently published GCC Investor Report 2018, a new YouGov survey commissioned by Select Property Group, 57 percent of Saudi investors were found to be keen on investing abroad, with the UK being among their top five investment destinations.

Fadi Moussalli, Head of International Capital Group at JLL, tells Argaam: “Despite the looming Brexit concerns, Saudi investors remain cautiously optimistic when considering opportunities in the UK, and are willing and able to place money when the right asset is identified.”

He further said: “They have a strong affinity to both London and the UK as a whole, and see it as the number one destination to invest. The uncertainty around Brexit has made them to take a small step back, but it’s expected that there will be a strong uptick in Saudi investment once the Brexit path becomes clear.”

Earlier this month, Saudi asset manager SEDCO Capital acquired office properties across the UK and France, as investments for its clients. In the UK, the firm advised on the acquisition of two properties, including a 25-acre warehouse site in Yorkshire for £31.8 million and a 4.7-acre office complex in Bracknell, Berkshire for £35.2 million.

Sherif Selim, Head of Global Real Estate at SEDCO Capital, says: “Brexit has definitely created uncertainty and, when there is such a situation, investor confidence is affected and sentiment is negative. That said, SEDCO Capital as investors focus more on real estate fundamentals and are aware that during uncertain times there are opportunities.”

Faisal Durrani, Head of Research at Cluttons, maintains commercial property in the UK presents a rewarding value proposition to Saudi investors, and will continue to do so regardless of political developments.

“UK commercial property investment still offers better total returns than shares, gilts, or equities at seven percent presently. Even in two years’ time, when this is expected to dip back to about four to five percent, commercial property will still likely be the best performing asset class.”

Write to Paromita Dey at paromita.d@argaamplus.com