LREF 2016: London could see Middle Eastern sovereign wealth funds sell assets and repatriate money as governments look to make up deficits created by the subdued oil price.
Speaking at Estates Gazette’s London and Dubai: Vanguard cities debate at the London Real Estate Forum, Steve Morgan, senior partner of Cluttons, said there will be a reduction in activity from the largest institutions.
“With the government having a fiscal deficit, some of the sovereign wealth funds will have to take assets out of the market, but high net worths still want to spend and spread their risk,” he said.
“There is a sense it might not be appropriate to spend outside of your country and that is coming through quite strongly from Saudi Arabia.”
Dubai has grown exponentially in the past 10 years and last year it handled the largest number of passengers in the world, overtaking London for the first time with 78m compared to 75m.
This was in part down to the decisive nature to the way business is done and investment is made in the “benign dictatorship”, as described by Morgan.
“Sheikh Mohammed makes the decisions and that is a massive difference, and it is a real problem for us and obstacle to be able to challenge it,” he added.
Morgan and Gavin Winbanks of UKTI agreed, this was also London’s strength compared to Dubai in its transparency, democracy and rule of law.
“The rule of law in the UK, while the planning process has its frustrations and timescales, might not be appealing to all investors, but it is a fair equal playing field for international investors and what has given London its position as the number one city in which to invest,” Winbanks said.
Listen to the full debate:
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