Research released by global real estate advisor CBRE has revealed that the UK regions outside of London were the preferred destinations for Middle Eastern investors in 2019 as spending levels overtook those in the capital for the first time.
According to the property advisor, 2019 saw Middle East investors deploy £230m into Scotland and a total of £880m across the UK regions, compared to £650m in Central London.
Whilst investment into the UK from the Middle East in 2019 was down on 2018, falling from £3.7bn to £1.5bn, this is the first time investors have deployed more capital into UK regional cities than into Central London.
In Scotland, transactions took place in Edinburgh, Glasgow and Aberdeen, whilst the £67m purchase of Abbotsinch Retail Park in Paisley by Ashby Capital represented the largest acquisition by Middle Eastern investors. Other notable deals included the £27m acquisition of Centrica’s HQ in Edinburgh by BLME/Darin Partners, the £55m acquisition of the Sauchiehall Centre in Glasgow by 90 North and Arbah Capital, and the £22m purchase of Technip HQ in Aberdeen by Black Sands.
Alistair Wright, a director at CBRE in Edinburgh with a particular focus on outbound ME capital, comments: “Having just returned from a series of meetings with key investors from the Middle Eastern region, it is evident that sentiment towards the UK property market is exceptionally strong. While the traditional requirements for defensive stock that offers stable earnings remain, we are seeing an increasing number of parties willing to move up the risk curve to satisfy return requirements.
“Compared to two or three years ago, a number of investors now have a UK track record and are looking to build on this. Accounting for over 80% of investment activity in Scotland’s office market in 2019, we anticipate that international capital will continue to dominate.
“Looking beyond London, these investors are attracted by the dynamics and discount on offer north of the border. Although Middle Eastern capital has typically been deployed into the office sector, the past year has seen notable diversification, with significant transactions taking place in Scotland’s retail and industrial sectors.”
Chris Brett, Head of EMEA Capital Markets at CBRE added: “In 2019 we saw a number of Middle East investors dispose of their London assets as they reached the end of their investment cycles, including the sale of 25 Canada Square, Citibank’s HQ. This group of investors have long been active in cities outside of London having invested £6bn in the UK regions in the last five years. However, this is the first time regional investment activity has exceeded that in London. Investors are increasingly attracted by the high levels of investment into regional infrastructure and the opportunity to achieve greater yields.”