UK property attracts Mideast funds

The Middle East has tripled its share of investment in UK commercial property in the past five years, with the oil-rich Gulf seeking to take advantage of sharp falls in British real estate prices.

Last year, investors from the Arab world spent £1.48bn ($2.2bn, €1.79bn) on UK commercial property – 16 per cent of all foreign investment in the sector, compared with 5 per cent in 2004, according to Trowers & Hamlins, an international law firm. The firm, which has offices in Britain and the Middle East, said the region’s investors had increased their exposure to take advantage of the fall in property prices, with the UK looking particularly attractive because of sterling’s devaluation against the US dollar.

With the exception of Kuwait, all Arab Gulf states peg their currencies to the dollar. The region’s wealthier governments were also able to build up significant financial reserves during the 2003-08 oil boom, making them cash-rich during the UK property downturn.