Middle Eastern real estate investors are increasingly turning their attention to Edinburgh and other prominent UK university cities to snap up properties, an expert told Arabian Business.
This marks a significant shift in investment patterns, which historically saw the majority of investor interest from the region focused on London.
According to new research by property investment company IP Global, Edinburgh has surged to become the top choice for investors from the Middle East, particularly the UAE and Saudi Arabia, in 2024.
“Investors are more open to looking outside the usual markets such as London, Manchester, and Birmingham,” William Page, Head of Global Sales at IP Global, told Arabian Business.
“There is a significant demand for smaller, strong university cities; for example, inquiries for York and Newcastle have doubled in 2024.”
Edinburgh undersupply, growing economy boost yields
Edinburgh’s rise to prominence is striking. IP Global found that, so far this year, a third of enquiries from investors in the region, especially those based in Saudi Arabia and the UAE, have been for real estate in and around Edinburgh.
This represents a massive surge from 2023 when around 8.5 percent of enquiries from the region’s investors sought real estate in the Scottish capital.
Page attributes Edinburgh’s appeal to several factors.
“Edinburgh has a chronic shortage of rental properties, resulting in stronger yields compared to similarly sized cities in the UK. Prices in Edinburgh are a fraction of those in London,” he explained.
“Prime property values are almost in line with Manchester, but the yields are higher, mainly due to workers having higher disposable incomes.”
The city’s economic fundamentals support this investor interest. According to IP Global, Edinburgh’s GDP rose by a whopping 182 percent since 2000, reaching GBP 33.1 billion ($41.9 billion) in 2023. House prices have also surged by over 49 percent since 2015, with a further increase of 17.6 percent expected by 2027.
University cities gaining traction
While Edinburgh leads the pack, other university cities are also attracting significant attention.
York, in particular, has emerged as a strong contender.
“There is a housing supply shortage [in York] which is creating a favourable market for property investors. House prices rose by 29.2 percent from 2017 to 2022, and properties are selling faster than in nearby cities like Leeds, Liverpool, and Newcastle.”
The IP Global data revealed that York is now the second most popular city for Middle Eastern investors, attracting 27.3 percent of enquiries. This surge in interest for university cities reflects a broader trend in investor preferences.
Middle East investors ditch London real estate
This pivot towards Edinburgh and other university cities comes at the expense of previously popular markets like London.
Once the darling of Middle Eastern investors, the British capital has seen a significant decline in interest.
“London has become a slower market purely for investors. Rising stamp duty, which heavily targets the middle to upper price brackets, along with increasing interest rates, has priced many investors out of the market,” Page said.
The Northern Powerhouse cities, while still attractive, have also seen changes. While demand for property in Manchester has softened due to a “search for more affordable cities with lower supply levels,” Edinburgh has emerged as a prime choice for many seeking lucrative returns, he explained.
“Prices in Edinburgh are relatively comparable to Manchester, but the supply coming to the market in the coming years is drastically lower.”
UK property types in demand
Middle Eastern investors are focusing on specific property types in these university cities. This mainly includes apartments in central city locations, which aligns well with the typical housing needs in university towns as students and young professionals often seek out centrally located apartments.
Despite potential economic and political uncertainties in the UK, investor confidence remains strong, Page believes.
This confidence is reflected in the continued interest from Middle Eastern investors. IP Global found that despite a challenging and uncertain economic environment and the prospect of a new UK government, the country’s property market remains an attractive one for Middle Eastern investors.
“Whenever there is change, we often see investment decisions put on pause. However, experienced investors know the underlying strength of the UK property market due to its chronic undersupply and are picking up deals now before competition grows again, as it inevitably will and always has,” said Page.
For Edinburgh and prominent university cities, their combination of strong rental yields, growing economies, and the presence of prestigious educational institutions makes them increasingly attractive alternatives to traditional investment hubs.
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