Saudi and Kuwaiti money returns to London property despite Brexit

LONDON: Property broker Knight Frank estimates there is as much as £40 billion targeting real estate assets in London this year despite a sharp retreat by Gulf-based investors in 2018.
Preliminary data for the first quarter has seen two transactions worth almost $171 million put Saudi Arabia and Kuwait back on the London commercial property investment leader board for 2019.
Taking into account the UK’s planned departure from the EU, which has dented confidence in some property sectors, Knight Frank expects the central London commercial property market to remain robust and supported by strong letting demand for prime property.
That was supported by a record letting this week when 37-year-old hedge fund boss Ravi Mehta agreed a £250-a-square foot rent for an office in Mayfair to be occupied by his firm, Steadview Capital Management.
“Despite the uncertainty thrown up by Brexit, there are bigger macro political considerations that are helping to cement London’s position as the number one global property investment destination,” said Faisal Durrani, an associate at Knight Frank.
“During 2018, the city beat other major global gateway locations including New York, Tokyo, Paris and Singapore, claiming the crown for the largest volume of commercial property investment globally, which amounted to £16.2 billion. This is on par with the level recorded in 2017, highlighting the depth of demand for London’s commercial assets.”
However Gulf investment fell sharply last year.
“For those from the Gulf, investment volumes, as always, remain volatile, with Bahrainis and Qataris committing $39.5 million and $471 million last year, which was up 125 percent and 34 percent, respectively, on 2017, according to RCA,” said Durrani.
While 2017 saw just over $2 billion spent by GCC investors on London commercial assets, this figure fell to just over $1 billion in 2018, with investment from the UAE down most notably by 88 percent to $132 million.