The recent Bank of England interest rate cut from 5.25% to 5% could be a catalyst for a predicted Gulf investment surge in UK property, according to a financial analyst.

Last week, research from Bank of London and The Middle East (BLME) predicted that the UK market was heading for a “once-in-a-decade economic alignment” that would create 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 respondents to a BLME survey said falling interest rates would be the key driver of GCC investor appetite.

Now the Bank of England has made the long-awaited move to lower the rate, Andy Thomson, head of real estate financial and private banking at BLME, believes the “wait-and-see” approach could end.

“The cut in interest rates by the Bank of England is welcome news for Gulf investors in UK real estate,” said Thomson. 

“We’ve already seen a marked uplift in inquiries in recent months, which reflects increasing confidence in the market. Now that rates are beginning to drop, we expect to see a further increase in investment. 

“Our research suggests that Gulf investors are focused on asset classes in the living sector – particularly PBSA, retirement accommodation and private rental schemes – as well as repurposing existing assets through the conversion of office blocks for residential use.” 

Thomson added: “With the new government’s priority to oversee an expansion in homebuilding, facilitating investment in these assets will be crucial to its success.”