Oil prices fueling Middle East interest in UK property
The UK remains a hot market for investors. (Pixabay)
The drop in oil prices is boosting the interest of Middle Eastern investors into London properties and house prices are expected to increase by 30 per cent in the next five years, according to a top official of CBRE.
“From our point of view the market is very robust,” CBRE senior director for Central London Rory Cramer told Khaleej Times during his recent visit to Dubai. Cramer was in town along with the CIT Development team, which was promoting the South Bank Tower project in Gulf countries.
“We have seen very strong investment from Middle East since August last year. I think there are a lot of reasons and one of the key reasons is the drop in oil prices. High net-worth individuals also want to diversify their investments,” Cramer said.
“I think the South Bank area outperformed the wider market. So a 30 per cent increase is highly possible in five years starting from 2015 or could be more on amazing developments in that area,” the CBRE official explained.
The South Bank is likely to see a rise in demand for residential property as more and more technology and finance companies move to new commercial spaces in the area. This increasing commercial migration is being described as “the expansion of the City” and is set to have an increasingly positive impact on the local residential market.
“We consider South Bank Tower in Central London,” Cramer said, adding that prime London properties recorded 12-14 per cent growth in 2014 compared to 2013. In 2014, house prices in London rose by 2.6 per cent on average and the market under £2 million saw the strongest performance.
“There tends to be a natural slowdown in the weeks and months preceding any general election, but we’re not seeing any substantial shift in investor sentiment,” Paul Preston, director, head of Europe, Middle East and Africa at IP Global, told this scribe.
“IP Global carefully selects its investment opportunities and we educate investors to focus on long-term, stable growth markets that won’t be impacted by short-term political cycles. As a result our UAE clients are not pulling back or jumping in response to the upcoming general election,” Preston explained.
The main party policies won’t change the fundamentals: the UK has a strong supply-demand imbalance, he said, adding that measures to increase house building are not likely to meet demand in the near future and demand continues to rise.
“We don’t believe the outcome will have an impact on the five-to-20-year investment cycle-approach we encourage our investors to take — the UK remains a stable, secure economy with great growth potential,” he said.
The UK remains a hot market for investors. The main parties have all announced measures that will drive up demand, won’t substantially tackle undersupply, and will push for balanced economic growth and regional development and investment in major infrastructure schemes which will create new pockets of value.
By Abdul Basit
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