London, NYC still top of mind for Middle Eastern investors
London, NYC still top of mind for Middle Eastern investors
Singapore is the third most preferred destination for gulf investors
International real estate consultancy Cluttons has released the third installment of its Middle East Private Capital Survey at a pivotal time, with Britain wrangling with the economic ramifications of a referendum to exit the European Union. Despite that, the survey showed that London still holds court among Middle Eastern property investors.
Surveying high net-worth individuals based in Gulf Cooperation Council (GCC) countries, Cluttons found that the British capital resonated with 11 percent of respondents as the top destination for property investment. New York City and Singapore rounded out the top three, with a five percent and four percent share of respondents, respectively.
Fourth and fifth place were both claimed by India; Bangalore and Mumbai respectively.
Middle Eastern investors have been exposed to London’s real estate market as early as the 1950s, but capital outflows to Britain this year are particularly remarkable given the Brexit referendum. “Of course, London’s residential real estate has long been a global star performer, with close to 70 per cent residential capital value growth recorded in the past ten years alone and we continue to witness an uptake in interest from Middle East investors,” said Faisal Durrani, head of research at Cluttons.
He also noted that Brexit has led to the discounting of the sterling by 12 to 13 percent, luring gulf investors to such prime markets in London as Belgravia and Chelsea. “Currency based investment strategies are often overlooked, but they are increasingly significant, particularly in the current environment of sterling weakness,” he said.
More: Singapore and Hong Kong are the new safe havens of APAC, says Knight Frank
Another traditional favourite, New York City, has received massive inflows of late from the Abu Dhabi Investment Authority and Qatar Investment Authority, Cluttons noted in its report. The relatively lower price points in the city apparently make it an appealing alternative to London for private investors.
Despite its heavily regulated market, Singapore is the third most attractive city to GCC’s upper crust due to its pro-business environment, political stability, and high quality of life. Cluttons particularly regards the USD2.22 billion acquisition of Asia Square Tower 1 by the Qatar Investment Authority as a sign of continued confidence in the city-state.
Fifty-four percent of respondents named residential real estate as their preferred asset class, while 60 percent cited capital value growth as their main financial investment driver. Sixty-three of respondents also reported that they are likely to invest in their most preferred property investment location during 2016.
Read next: Yet another Asian investor staking their claim in post-Brexit London
Source: Property Report