Here’s Why Gulf Investors Are Buying UK Property

Here’s Why Gulf Investors Are Buying UK Property

As the real estate market in the Middle East stabilises, Gulf investors are diversifying their property investment portfolios and flowing their money into the UK real estate market.

GCC nations including Saudi Arabia, UAE and Bahrain have all invested in several UK real estate assets in the past few years due to their strong yield projections.

Manchester and the Northern Powerhouse attracted some of the highest levels of foreign direct investment of any UK region outside of London, according to research from Ernst & Young.

London Canary Wharf - Gulf investors buying property in the UK, but not London

GCC Investors Agree that UK Property Is One of the Strongest Investments

According to a YouGov survey commissioned by Select Property Group, 77% of GCC investors agree that the UK is one of the top overseas property investment destinations, mainly due to the UK’s strong capital growth and high yields.

Also, over 60% of GCC investors agreed that despite London being the most popular city in the UK for investing, higher rental yields could be achieved in Manchester.

Why GCC Investors Are Choosing Property Investment In Manchester Over London

While London has always been the go-to city for Gulf investors, there’s been a shift in recent years to northern UK cities with strong financial performance, population growth, and infrastructure expansion.

Andrew Burrell, Chief Property Economist at Capital Economics, forecasts that “prices in London could drop by another 5%, but rise elsewhere”, in 2019. Over the past year, London house prices experienced a drop in value, while northern cities such as Manchester have achieved sustained levels of growth.

As investors in London are experiencing sluggish returns, the latest figures prove that both price and rental growth in the UK is now strongest in the northern cities.

Moreover, with uncertainties in the market, Manchester real estate remains one of the world’s strongest and most attractive investment cities due to its expanding economy, high returns and proven track record of growth.

Increasing Population and Infrastructure Expansion is Driving Manchester’s Property Market

Manchester, the UK’s second largest economy and northern England’s economic powerhouse, is quickly becoming a popular investment opportunity for Gulf investors. A soaring population and high demand for real estate are driving property prices up and directly facilitating investor returns. Multi-billion-pound investments in business, infrastructure and transport, including the high-speed rail network and light-rail system, are also factors projecting long-term growth and steering Gulf investors to invest in Manchester.

  • With Manchester’s population expected to increase by 125,000 by 2025, demand for real estate will continue to rise and the city will need to build about 9,000 homes yearly to keep up
  • By 2022, residential housing delivery in Manchester will meet just 25% of annual demand, based on current projections
  • Between 2017 and 2018, average house prices in Manchester grew by 9%, outperforming the UK average of 5%
  • Projected average residential price growth in Manchester is 81% higher than the UK average
  • Projected average residential rent price growth in Manchester is 40% higher than the UK average

Asset classes attracting Middle Eastern investors mainly include purpose-built student accommodation, luxury purpose-built residential rental property, modern buy-to-let apartments, and luxury serviced apartments in prime central business district locations.

Demand for student accommodation and the build-to-rent sector will continue to experience growth in the coming years, largely due to a huge property undersupply that’s contributing to consistently high returns.

Investors to Achieve Strong Long-Term Growth with Property in Manchester

Gulf investors are seeing the benefit of investing in property in Manchester, as properties have been selling faster than national averages and prices are increasing substantially, in correlation to the growing population of students and young professionals.

The future continues to look positive for Manchester, with yields being 67% higher than in London, and prices projected to further grow by 57% over the next 10 years, making it the strongest investment amongst all of the top UK cities.

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