Middle East property investors shrug off Brexit blues

The UK capital London is still seeing strong interest from Middle Eastern property buyers despite Brexit. (REUTERS)

LONDON: The UK capital is still seeing strong interest from Middle Eastern property buyers, even as politicians in Westminster wrangle over Brexit.
The lure of safe-haven London remains high, and is expected to strengthen rather than decrease, brokers said.
Arab buyers are lured by currency weakness, the decline in prime central London prices and robust domestic demand for homes.
As war and political upheaval roils much of the Arab world, the safe haven appeal of London remains strong.
“For people from the Middle East or Asia, looking at the UK as a safe haven investment, it is still a very safe bet, and compared to their own markets, it’s still very, very safe,” said Faisal Durrani, the head of research at the Cluttons property consultancy.
Investors from the Middle East spent $1.8 billion on commercial property in London between April 2016 and April 2017, according to CBRE data.
The lure of London is underscored by investment into second-place New York, which attracted just $884 million over the same period.
Property specialist Rupert Bowen-Jones of READ Advisors, which works with wealthy Arab buyers, said that London’s attractiveness to overseas investors has not changed.
However, some investors are more interested in putting their money into the secondary residential market, rather than into off-plan purchases.
“We have witnessed more Middle Eastern buyers seeking to acquire residential property in need of refurbishment, which is available for a much lower price, and therefore with a much lower tax bill to be settled.
“The buyer then typically refurbishes the property to their own standards and ends up with a bespoke solution for less money than if they had bought a finished product from a developer,” Bowen-Jones told Arab News.
Investing in this way can also open the door to tax advantages, such as the reduction of VAT payable when properties are renovated after two years of being vacant, under the Urban Regeneration Scheme.
“There are few Middle Eastern buyers who cite Brexit as an issue, rather they view it as an opportunity, as weakness in the market has meant there are better deals around, and the currency has been at their back to provide additional value,” Bowen-Jones added.