LONDON — Gulf investment in UK real estate is expected to reach 2.5 billion pounds ($3.2 billion) in 2024 as British property prices continue to fall, according to research from one of Europe’s largest Islamic banks, Bank of London and The Middle East (BLME).
High inflation in the United Kingdom is causing domestic mortgage rates to hit the highest levels since the 2008 financial crisis, with a typical two-year deal rising to 6.66% in mid-July. This means less people want to buy property, as it is less affordable, and reduced demand can cause real estate prices to fall.
A new report from the London-based bank released Tuesday said there were three reasons for this anticipated increase, the first being the strength of the Gulf economies and the need for asset diversification. It also said that there is projected growth in favored asset classes such as purpose-built student accommodation and a continued Gulf Cooporation Council (GCC) appetite for UK property assets outside of the capital London.
According to the report, the combination of falling UK property prices, favorable exchange rates and fast-paced growth in the GCC has led to pent-up investor demand, with greater affordability being the biggest factor affecting the appetite for UK real estate right now. BLME said that GCC investors are capitalizing on lower property valuations and that it anticipates those investors refinancing when interest rates start falling.
