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As the cost of living crisis in the UK continues to worsen, a significant number of millionaires are packing their bags and seeking solace in the United Arab Emirates (UAE), particularly Dubai. This mass exodus of affluent Brits is expected to boost the real estate market in Dubai.
According to a recent report by Arabian Business, the escalating cost of living in the UK, exacerbated by rising energy prices and inflation, is causing a significant shift among the country’s wealthy population. The cost of living crisis has not only affected the average UK citizen but also the wealthier sections of the society.
Dubai, with its favourable tax laws, high standard of living, and robust infrastructure, is turning out to be an appealing destination for the UK’s rich populace. The emirate’s real estate sector, which has been experiencing a steady recovery since the pandemic-induced slump, is expected to benefit greatly from this trend.
UK millionaires are being attracted to the UAE due to several factors. Among them are the absence of income tax, the high quality of life, and the world-class infrastructure. Moreover, the UAE’s strategic location at the crossroads of Europe, Asia, and Africa makes it an ideal hub for international business.
However, this is not a one-way street. The UAE, and particularly Dubai, has a long-standing relationship with the UK. Many UK nationals already reside in the UAE, and the country’s real estate sector has always been a popular investment destination for British investors.
In conclusion, as the cost of living crisis in the UK intensifies, the UAE, with its numerous advantages, is set to welcome an influx of British millionaires. This migration is expected to have a positive impact on the UAE’s real estate sector, particularly in Dubai1.
(source: “UK millionaires head to UAE as richest Brits leave as cost of living crisis worsens, Dubai real estate to benefit” – Arabian Business) ↩
The United Kingdom’s resilient property market is set to attract more Gulf capital in 2024, despite signs of a slowing global economy and rising interest rates. Industry insiders have revealed that investments in UK real estate from Gulf investors will remain strong this year, bolstered by recent deal activity and the forthcoming ETA visa scheme.
Data from real estate consultancy Knight Frank indicates that the 10-year average annual GCC investment into UK commercial property stands at around $3.4 billion. When considering investment in UK residential assets, the figure is even larger. The UK, and London in particular, is viewed as a safe haven for investors due to its cultural, historical, retail, and educational appeal.
However, higher interest rates have impacted demand for UK property. Last year, transaction levels dipped by approximately 10 percent, but prices remained relatively stable, with only a 2.1 percent fall in Prime Central London.
Despite these challenges, there is renewed optimism in the property market as the economy begins to stabilize and mortgage rates become more attractive. That said, with a general election expected in the summer, it’s unclear how long this window of opportunity will last.
The weakening of the British pound against other major currencies like the US dollar has made UK properties more attractive to Gulf investors. As a result, GCC-based investors have increased their allocation to UK real estate as they seek opportunities created by market distress.
Berkeley Group has noted a significant surge in purchase inquiries from the region, suggesting that the current position of the pound is not lost on investors. The multifaceted appeal of the UK property market, including long-term capital appreciation prospects and attractive financing opportunities, means the UK’s resilient property market is poised to lure more Gulf capital in 2024.
Although recent interest rate hikes may cool some property sectors, lower prices, and select yield plays appear to still attract Gulf investors. The UK real estate market remains a bullish prospect for Gulf investors, despite the economic slowdown.
Gulf Cooperation Council (GCC) investors are showing an increased sophistication and understanding of diverse opportunities in the UK real estate market. According to a report by CNBC, many economic observers have pointed to the Gulf states, particularly the UAE and Saudi Arabia, as leveraging their oil wealth and geographic advantages to make strategic investments1.
Simmons, a renowned real estate expert, noted that GCC investment in UK real estate significantly increased last year from 2022 levels, with activity witnessed throughout the UK and not just confined to Central London. He highlighted the region’s growing sophistication and understanding of the diverse opportunities available across the country.
Middle Eastern investors have been particularly active in prime market segments, ramping up deals targeting higher-value properties even as global transaction volumes fell in 20232. “We think GCC investment into UK Commercial Real Estate market will continue to grow throughout 2024 and be more in line with the long-term trend – [circa] £2.5 billion – £3 billion,” said Simmons.
Aiding this growth is the UK government’s recent implementation of a streamlined Electronic Travel Authorisation (ETA) visa scheme. Initially introduced for Qatari nationals in 2023, the scheme, which reduces bureaucracy for international travel and business visits to view assets, will be extended to include nationals of Bahrain, Kuwait, Oman, United Arab Emirates, Saudi Arabia, and Jordan starting February 13.
However, while the ETA scheme may assist in facilitating investment, it won’t be the primary driver of deals. “The ETA scheme may add some assistance but won’t be the main thrust behind the majority of decision-making,” said Simmons. Instead, he advises potential investors to tread carefully, highlighting the importance of partnering with the right advisors and being aware of the details in dealmaking.
As Gulf investors continue to grow more sophisticated in their investment strategies, the UK real estate market can expect to see continued interest and investment from the region in 2024.