A $6m investment into prime central London real estate would effectively cost 40% less today than six years ago
The uncertainty surrounding the UK’s exit from the European Union and the weakness of the British pound have created a “rare opportunity” for Middle East investors, according to Steven Morgan, the regional CEO of real estate consultancy Savills.
In an interview with Arabian Business, Morgan said that Gulf-based investors are taking advantage of a weak pound and lower property values, particularly in London.
“London has come off by 15 to 20 percent in terms of capital values on the residential side,” he said. “If you’re holding dollars, which are 20 percent better off, there’s a 30 to 40 percent play against where you would have been five years ago,” he said.
Morgan’s comments are supported by data from Savills, which found that a £5m ($6m) investment into prime central London real estate would effectively cost 40 percent less today than five years ago, before taxes.
“For many investors, that offsets the instability of Brexit,” he added. “Everybody has had enough of Brexit and wants to push on.”
According to Savills, London remains the top global city for cross-border real estate investment, ahead of New York, Paris, Hong Kong and Amsterdam.
The UK as a whole is the most popular country for capital investment, followed by Germany.
In the long-term, Morgan said investments into London will be bolstered by a potential increase of 12.4 percent in London residential property values over the next five years, as well as an anticipated 27 percent rise in GDP growth between 2019 and 2029.
“It’s a pretty rare opportunity that one hasn’t seen for many, many years, at a level where you’ll see currency gain and some up-tick in capital values as well over the next five or 10 years,” he said.