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Savills: Outbound investment in real estate from Middle East rises 62%

Savills: Outbound investment in real estate from Middle East rises 62%
Prime London residential property values are forecast to show recovery

Mubasher: Investment in the global real estate market is showing faster growth than any other region, while outbound investment in properties from the Middle East region has soared by 62% during the first half of 2019, Savills said.

In a high-profile event at the UK Embassy in Egypt, and in association with the Department for International Trade, Savills Middle East, together with Her Britannic Majesty’s Ambassador to Egypt, Sir Geoffrey Adams, hosted Egyptian investors on 16 October.

Steven Morgan, CEO ME of Savills pinpointed, “Middle East investors are increasingly drawn towards global real estate assets as long-term investments.”

He further added, “That interest has translated into a sharp increase in cross-border transactions, particularly into mature global destinations such as Northern Europe and North America, with US$8.9 billion crossing borders in H1 2019 – an increase of 62% compared with H1 2018.”

Real Estate Market in the UK

Followed by Germany, the United Kingdom is considered the most popular country that attracts capital investment; London is traditionally holding the title of the most popular city for global investors, while it is keen on taking advantage of currency exchange rates.

World leading real estate advisor, Savills, noted that GBP 5 million worth of investment into prime central London real estate would effectively have a 40% cost that is less today than five years ago, pre-tax.

Research shared by Savills during the event showed that “London leads the way for cross border investment into real estate. Our research indicates London is the third most resilient city in the world, so while there is undoubtedly some volatility around Brexit, the underlying strength of the UK capital as a global business hub means it will remain a powerhouse.”

It further added, “Average prime central London prices are around 20% lower than five years ago and combined with current dollar-pound exchange rates, Middle East investors are already taking advantage of very favourable terms with a view on the medium to long-term fundamentals of the London market.”

Post-Brexit scenario

Prime London residential property values are forecast to show recovery in a post-Brexit scenario; Savills expects the values to increase by 12.4% over the next five years. The UK’s gross domestic product (GDP) is set to show steady growth, with a 27% rise within ten years between 2019 and 2029, with London being one of the prime beneficiaries, as it is responsible for nearly a quarter of all of the country’s economic output.

Savills’ research also said that “This is only set to increase as major global companies are incentivized to locate in the UK capital, already Google is investing GBP 1 billion into a new King’s Cross HQ which will generate 3,000 jobs by 2020, and Apple is creating another 1,400 jobs to fill its new world-class hub at Battersea Power Station HQ.”

It is worth noting that on 16 October, Savills announced new building and project consultancy services, for the first time, across its Middle East operations.