Real estate investors from the Gulf region are targeting retirement homes, student accommodations, and rental schemes in the United Kingdom, a new report suggests.
This comes as Gulf investors are poised to increase their investments in the UK property sector in the coming year, according to a report by Bank of London & The Middle East. This development comes after an extended period of cautious “wait and see” approaches, BLME said.
The report suggests that GCC investment in UK commercial property could surpass $4 billion annually, up from the 10-year average of $3.4 billion. This projected increase is driven by several factors, including anticipated interest rate cuts, attractive asset valuations, and a more stable political landscape following the recent UK general election.
Growing interest in UK living sector
Of particular note is the growing interest in the UK living sector. The report reveals that 70 percent of experts interviewed indicate GCC investors are zeroing in on asset classes within this sector. These include retirement living, private rental schemes, co-living, and purpose-built student accommodation (PBSA).
“The UK’s ageing population points to a reliable level of long-term demand for retirement living assets,” the report states. It also highlights the country’s “longstanding undersupply of residential properties” as a factor that will drive sustained appetite for private rental schemes.
The attraction to the living sector is further bolstered by demographic trends and market fundamentals. With an ageing population and a persistent housing shortage, these assets are viewed as offering stable, long-term returns – a key consideration for GCC investors looking to diversify their portfolios.
Johan Eriksson, Managing Partner at Oryx Real Estate Partners, comments in the report, “The prospect of interest rate cuts along with a more appealing entry point and continued rental growth will attract GCC investors to the UK market.”
The findings also touch on the potential for investors to capitalise on the “Green premium” by purchasing and upgrading assets to comply with the UK’s new environmental requirements, potentially selling them at a profit later.
While the outlook appears positive, the report does caution that potential future trends and risks, such as tax changes and appetite for regeneration, are on the minds of GCC investors and could impact investment decisions in the coming years.
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