Investment in the UK property market by Gulf investors is set to increase, new research from Bank of London and The Middle East (BLME) has found.

According to the research, the UK market is heading for a “once-in-a-decade economic alignment”, with cuts to interest rates expected later in the year, a new government in place, falling inflation and lower property prices in some segments of the market creating an opportunity for Gulf Cooperation Council (GCC) investors from Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman ready to deploy their capital. 

Some 87% of interviewees BLME spoke to for the report said falling interest rates would be a key driver of GCC investor appetite over the next 12 months.

Looking to the future, BLME predicts that demographic trends and supply shortages will make the living sector a more popular option for investors in the future – particularly those from the GCC. 

Purpose-built student accommodation in particular is a popular asset for investors, with 68% of respondents saying their clients were focused on the sector, because of the structural shortfall and low tenant failure rates.

Rashid Khan-Gandapur, director, real estate finance at BLME, commented: “We anticipate investors from the GCC will look to the UK to diversify their portfolios, and they will see profitable opportunities to invest and improve existing building stock including the enhancing of ESG credentials as a driver of value. 

“Investment in UK commercial properties as a whole is expected to grow to over $4bn annually. This figure will be boosted further by investment in the residential sector, with GCC investors showing a growing appetite for undertaking large scale living sector investments.”

Andy Thomson, head of real estate finance and private banking at BLME, said: “The UK has a new government in place, the Brexit decision from 2016 is firmly in the back mirror and the economy and political landscapes have relatively stable outlook compared to other countries in Europe. 

“In addition, interest rates are forecast to fall during 2024 and 2025, which means the UK is very well placed to attract an increased level of inward investment from the GCC.”