According to Rashid Khan-Gandapur, Director of Real Estate Finance at BLME, investors from the GCC are increasingly looking to diversify their portfolios by investing in and improving the UK’s existing building stock, particularly by enhancing their ESG credentials to drive value.
Khan-Gandapur noted that investment in UK commercial properties is expected to exceed $4 billion annually, with a significant boost from residential sector investments. “GCC investors are showing a growing appetite for large-scale living sector investments,” he said.
Andy Thomson, Head of Real Estate Finance and Private Banking at BLME, highlighted the favorable conditions in the UK for attracting GCC investment. “The UK has a new government in place, the Brexit decision from 2016 is firmly in the back mirror and the economy and political landscapes have relatively stable outlook compared to other countries in Europe. In addition, interest rates are forecast to fall during 2024 and 2025, which coupled with lower commercial property prices means the UK is very well placed to attract an increased level of inward investment from the GCC.”
The BLME report emphasizes the increasing value of optimizing assets for their ESG credentials, as market and regulatory pressures heighten the worth of sustainable buildings. Green-rated buildings command a sales price premium of 8-18% over their non-BREEAM-rated counterparts.
Looking ahead, BLME predicts that demographic trends and supply shortages will make the living sector even more appealing to investors, particularly those from the GCC. Purpose-built student accommodation stands out as a particularly popular asset, with 68% of respondents indicating their clients’ focus on this sector due to the structural shortfall and low tenant failure rates.
The UK remains a preferred destination for students from the GCC, with a record number of UAE residents applying to UK universities. Data from the Higher Education Statistics Agency (HESA) shows that over 8,000 students from the UAE are currently studying in British institutions, nearly double the number from five years ago.
