30% of Middle Eastern investment spent outside of Central London post EU referendum

20 December 2016

According to Savills research, 30% of all Middle Eastern capital targeting the UK post EU referendum has been deployed outside of Central London, with £271.8 million of the total £909.6 million invested in the UK regions. Comparatively, only 19% of transactions by Asian investors post-Brexit have taken place in the UK’s regional commercial property market.

The firm says £1,431 million has been invested by Middle Eastern investors in the UK in 2016 year to date, across 25 transactions. In 2015, £38,090 million was invested in UK commercial property by Middle Eastern investors, and £28,030 million in 2014, according to Savills

Middle Eastern investors continue to chase long dated income streams with strong covenants and internationally recognised brands with key deals including: Palmer Capital and SEDCO Capital purchasing Waterside House in Bracknell for £35.2 million, reflecting a net initial yield of circa 5.65%; Rasmala acquiring Abbvie House on Vanwall Business Park, Berkshire, for £24.5 million and Kuwait’s Global Investment House (Global) purchasing the NHS Scottish and UK / European head quarters offices at the Gyle Business Park in Edinburgh and 3M in Bracknell for a total of £200 million. Savills says Middle Eastern investors now have an 8% market share of the UK’s commercial property market, and a 12% share of investment in Central London.

Hassan Farran, director in the cross-border investment team at Savills, comments: “Middle Eastern investors undoubtedly recognise London as a global gateway city and those with long term aspirations continue to view the wider UK as an attractive investment destination because of our legal system, landlord friendly regulations, standardised market, time zone and culture.

“The weak pound is attractive to investors whose currency is pegged to the US dollar and this has contributed to the ongoing resilience of the UK’s commercial real estate market post EU referendum.  As a result some Middle Eastern investors who have previously been sitting on the sidelines have decided now is the time to buy. The strength of covenant is now more important than ever for Middle Eastern investors and as a result we are seeing activity in the UK regional markets, when other overseas investors like those from Asia are more focused on London.”

Looking forward, Savills expects UK commercial real estate will continue to attract Middle Eastern investors.

 
 

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Key Contacts

Hassan Farran

Hassan Farran

Director
Cross Border Investment

Savills Margaret Street

+44 (0) 207 409 8923

 

Kirsty Moseley

Kirsty Moseley

Associate Director
Commercial Marketing & Press

Savills Margaret Street

+44 (0) 207 409 8887