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Regional assets targeted by Middle Eastern buyers

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Middle Eastern investors have turned to regional assets in the wake of the EU referendum, according to research by Savills.

The agency found that 30% of all Middle Eastern capital invested in UK property since the Brexit vote has been placed outside of central London.

A total of £909.6m has been invested in the last seven months, of which £271.8m has been spent in the UK regions.

By comparison, only 19% of transactions by Asian investors post-Brexit have taken place in the regional markets.

According to Savills, Middle Eastern investors have continued to chase long income streams with strong covenants and internationally recognised brands.

Key deals in 2016 included Palmer Capital and SEDCO Capital purchasing Waterside House in Bracknell for £35.2m and Rasmala acquiring Abbvie House on Vanwall Business Park in Berkshire for £24.5m

Savills said Middle Eastern investors now have an 8% market share of the UK’s commercial property market and a 12% share of investment in central London.

London seen as ‘global gateway’

Hassan Farran, director in the cross-border investment team at Savills, said: “Middle Eastern investors undoubtedly recognise London as a global gateway city and those with long term aspirations continue to view the wider UK as an attractive investment destination because of our legal system, landlord friendly regulations, standardised market, time zone and culture.

“The weak pound is attractive to investors whose currency is pegged to the US dollar and this has contributed to the ongoing resilience of the UK’s commercial real estate market post EU referendum.

“As a result some Middle Eastern investors who have previously been sitting on the sidelines have decided now is the time to buy.

“The strength of covenant is now more important than ever for Middle Eastern investors and as a result we are seeing activity in the UK regional markets, when other overseas investors like those from Asia are more focused on London.”

Author: Mark Wilding, Property Week