London has been named the most popular city for real estate investment by wealthy Middle Easterners ahead of nearly 200 global destinations. The result demonstrates continued faith in the British economy by foreign investors, regardless of the results of the referendum on European Union (EU) membership in June.
Mayor of London Boris Johnson once described himself as the “mayor of the eighth emirate” – and with good reason. In a YouGov survey of 127 high net worth individuals from the Gulf region commissioned by the high-end property investment firm Cluttons, London was most often named as the top city worldwide to invest in property, followed by New York and Singapore.
11 per cent of the individuals — hailing from the Gulf Corporation Council states of Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Oman and Kuwait — named London as their number one destination, against five per cent who chose New York and four per cent who named Singapore. Los Angeles also featured in the top ten, as did the Indian cities Bangalore and Mumbai.
The result comes despite governmental scaremongering over the possible instability of the UK economy should the British people vote to exit the EU in June, a factor which Cluttons’ analysts say is the biggest threat to growth forecasts.
Investors clearly disagree, as just half of those surveyed said that a Brexit would have a “negative impact” on their investment strategies, while the rest said it would have no impact or even a positive impact.
And of those who ranked London top and gave an opinion on the negotiations ahead of the referendum, 55 per cent said they would be more likely to invest in the Capital’s real estate market, suggesting that there is support globally for Britain becoming more independent.
The referendum debate is taking place against a backdrop of falling energy prices, with the oil price tumbling 60 per cent in the last two years to a current trading price of around $30 per barrel.
“When considering the drastic fall in oil prices, it makes sense that there is a strong appetite for international real estate,” said Steven Morgan, Cluttons’ senior partner elect.
“Investors want to put their capital into alternative assets and with stock market volatility, bricks and mortar seems like a safer alternative.
“There is also the added advantage of Middle Eastern currencies being pegged to the US dollar, making London property assets more affordable considering the recent weakening of sterling and euros against the greenback.”
Those economic realities are likely to far outweigh any concerns Middle Eastern investors have over the government scaremongering on the possibility of economic turmoil post-Brexit, especially when investors consider that London residential real estate has yielded a 107 per cent increase in value over the past 15 years.
Faisal Durrani, Cluttons’ head of research added: “The results of the survey really does throw weight behind London’s appeal as the world’s leading property investment hub. London has always emerged as a strong magnet for investors in times of economic uncertainty. And with the tide turning negative on the global growth outlook, London’s attractiveness is growing ever stronger.”
Last month the respected economist Ruth Lea advised British voters to “ignore EU scaremongers” and insisted: “Brexit would enable a major competitiveness boost to the British economy.”
Writing for City AM she said that a Brexit would cause no major disruption to British trade, and that “Britain would flourish” if set free from onerous Brussels regulations.
“The Single Market still tends to be perceived in the UK as a free trade area, with regulations added as a rather tiresome afterthought,” she said.
“But this is to profoundly misunderstand the Single Market, which was designed to be a harmonised (regulated) market from its inception. Regulation is in the Single Market’s DNA, and we would be better off without it.”