GCC Investors Halt Capital Flow Into UK Real Estate
Gulf investors holding back on United Kingdom property deals due to concerns prices will fall on the UK’s vote leave the European Union.
Sovereign and private investors from the region have been some of the most prolific buyers of British real estate in recent years, particularly in the London.
“Sovereign wealth funds are concerned that Brexit is taking its toll on the property market in London,” a London-based lawyer for some of the biggest Gulf funds said.
He said the situation would “further deteriorate” because the country voteed to leave the European Union on 23 June.
Foreign capital flows into UK real estate stopped in Q-1 of the year, Bank of England (BOE) Governor Mark Carney said in April on anticipation of the Brexit event.
A senior Gulf government official said that long-term investors are unlikely to leave the country en masse on the vote to exit the EU, but many worried about the impact on their real estate value of their portfolios.
“Of course we are worried about what will come next,” the official said. “We think that there will be a negative impact on our investments in the UK because the selling prices will likely go down and the banks in England may face some difficulties.”
Former Qatari Prime Minister Sheikh Hamad Bin Jassim Bin Jaber al-Thani spoke out on the Brexit vote.
“In the Middle East we all want to see a strong Europe, and believe that economic integration is Key to making it stronger. In fact, we believe the UK should not only be part of the EU but should lead it,” he said, describing the City of London as the “financial capital of the world”.
Qatar has been one of the most high-profile investors in the country, with assets including skyscraper the Shard, Harrods department store, the Olympic Village and a stake in the Canary Wharf financial district as part of a consortium.
A senior Qatari banker said he expects a “big hit” to real estate investments on the UK’s decision to exit the EU.”
Recently the Chief Investment Officer of Abu Dhabi-owned Falcon Private Wealth said it encouraged clients with exposure to the UK to hedge against the devaluation of the GBP in the run up to the vote.
For now investors are taking a wait and see attitude.
Have a terrific weekend.