With Dubai’s Easa Saleh Al Gurg Group in exclusive talks to buy 2&3 Bankside, SE1, for around £400m, eyes turn again this week to the Middle East as a bigger source of real estate investment.
It’s by no means Al Gurg’s first investment in the UK; Bankside would represent the group fourth and largest acquisition since entering the UK market in 2013.
And it is only one of a number of Middle Eastern investors enthused by opportunities in the the UK right now.
Al Gurg’s move came as EG led a UK investor delegation to the United Arab Emirates this week. Aaref Hejres, chairman of the Bahrain Property Development Association, summed up the view of many Gulf investors when he described London as a “second home”. Majed Al Kahn, chief executive of the real estate division at Bahrain-based investment bank GFH, said “historically closed” investors in the country were now targeting the UK as they looked to expand their local portfolios and take advantage of sterling’s weakness.
Yet there are, of course, hurdles to overcome if more Gulf investors are to be persuaded to invest in the UK.
Speed is a factor. It was clear in Dubai and Abu Dhabi that investors want to move faster on projects than is historically the case in the UK. Extolling the virtues that a major infrastructure project might bring in a decade’s time raises eyebrows in a region where delivering a project in a fraction of that time is the norm.
And scale of opportunity is another. On a tour of the new, man-made Deira island off Dubai’s coast, our delegation of UK developers and advisers heard how it would be home to a new community, hotels and retail. That island alone could house 300,000 people, about the same as the population of Coventry. Size matters in that part of the world. And Middle Eastern money wants to back opportunities of scale.
But, as Abu Dhabi United Group’s investment into Manchester shows, if speed and scale can be delivered, investors are not fixated on London.
And at a time when new lenders are cutting back on market activity – and appearing to retreat to backing core assets with low LTVs in London and the South East – investors willing to look nationally are more welcome than ever.
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