Banks Help Power Foreign Real Estate Investing in London

A weak pound sterling is making London a prime target for GCC real estate investing.

And there are plenty of banks in the city ready to help citizens of Gulf Cooperation Council (GCC) countries seize the opportunity.

While GCC nationals have long made up a healthy share of London’s foreign property owners, the declining number of Russian investors this year, coupled with the comparative strength of the dollar-pegged Gulf currencies, has led to an upsurge of interest from GCC buyers.

And banks that specialize in connecting the region to the U.K. market are capitalizing on the opportunity as they play a key role in enabling transactions for GCC investors looking to increase their exposure to London real estate.

Just last week (Dec. 15), the Bank of London and the Middle East (BLME) announced the opening of a new office in Mayfair specifically to serve GCC nationals interested in acquiring properties in the U.K.

As anyone who’s ever played British Monopoly will know, Mayfair is one of London’s priciest boroughs and one of the only parts of the city, and indeed the world, where prices for individual homes can top 100 million pounds ($121.77 million).

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As the Mayfair-based estate agent Wetherell reported last year, the “giga-prime” 100 million+ pound home market in London is dominated by buyers from just seven countries: Qatar, India, the U.K., the U.S., China, the UAE and Saudi Arabia. But overall, Qatari nationals have been especially prolific buyers in recent years.

In 2016, they were reported to own almost a quarter of the borough’s 279 acres and over 4,300 residential properties, leading to the term “little Doha” being used to describe the area northwest of Mayfair, with a high concentration of properties owned by Qatar’s ruling Al Thani family and their associates.

Apart from BLME, other GCC banks that have set up shop in the wealthy borough to help GCC billionaires invest in London’s most prime real estate include Qatar National Bank (QNB) — which has its London headquarters on Mayfair’s Grosvenor Street — Arab National Bank (ANB), Riyad Bank and Saudi British Bank (SABB).

From Private Investors to Sovereign Wealth Funds

Further down the London property pyramid, GCC investors are moving to snag real estate in lower price ranges too.

In October, the international estate agent Chestertons reported that it had experienced a 10% uptick in inquiries from Middle Eastern buyers looking to purchase in the city, with properties worth under 1 million pounds ($1.22 million) the most sought-after.

This comes as little surprise because although the pound has recovered somewhat after nearly hitting parity with the dollar at the end of September, the exchange rate is still historically favorable to dollar-denominated currencies.

In the parallel world of commercial real estate investing, the weakened sterling that is driving GCC-based individuals to buy homes will likely also fuel further investment from the region’s sovereign wealth funds (SWFs). These SWFs are among the largest financiers behind London’s development projects, which include some of the city’s most iconic buildings.

London’s tallest building, the Shard, for example, was originally financed by a consortium of private Qatari investors including QNB and is now 95% owned by the Qatar Investment Authority (QIA).

The QIA also has a 20% stake in London’s Heathrow airport, and alongside the U.S. firm Brookfield Properties, co-owns the Canary Wharf Group. The company is one of Europe’s largest property developers and owns several billion pounds worth of London real estate.

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