Visa free access to Schengen area and unexpected UK Election result set to bolster UAE investment activity

Dubai, 25 May 2015: The European Union has been at the centre of financial difficulties since the Great Recession, with positive economic news from the bloc remaining limited. This month however, with the decision to grant Emirati's visa-free access, cross border property investment is expected to receive a tremendous boost, according to leading international real estate consultancy, Cluttons.

European allure

Faisal Durrani, Cluttons' international research manager explained: "There is no doubt that visa free travel to the Schengen area for Emirati's has unlocked the door for a significant potential upturn in cross border property investment. The added benefit of the weakness of the Euro means that Dirham buyers are now about 23% richer than this time last year, in Euro terms. This clearly makes an EU based property investment particularly attractive.

"Of course it's not just Emirati buyers that are in this position. With most GCC states maintaining a fixed peg to the US Dollar, they are all well positioned to leverage this tremendous currency advantage that does not look set to weaken in the short term, especially as the Greek financial saga lingers."

Joanna Leverett, head of international residential agency added: "We know through our research that property is always a favourite investment asset class amongst the world's wealthy and London, along with other key European capitals, consistently features on top of property investment hot-spot lists."

Our new office in Andalucia, in southern Spain has been a run-away success. British buyers in particular have been quick to sense the bottoming out of the Spanish property market and with Sterling retaining its edge over the Euro, UK buyers are rapidly snapping up second homes across the sun drenched Spanish coast. And this is a pattern we are seeing echoed across southern Europe. The rich Islamic heritage of southern Spain is likely to add to the overall appeal to GCC buyers."

UK investment landscape

Cluttons also believes that the surprise result in the UK General Election means that the country is set to enjoy an extended period of economic stability and growth, while the continuity of the governing Conservative Party is expected to eliminate any anxieties surrounding previous worries of a hung parliament.

"The threat of a coalition government that excluded the Conservatives and one that planned to undermine the housing policies introduced under David Cameron has now dissipated, much to the delight of the investment community. We can now safely say that the risk of an annual "Mansion Tax", aimed at properties valued at over £2 million (~AED 12.4 million) has completely dissipated. The 'Mansion Tax' really would have been a tax on London and the South East, where almost 90% of the UK's £2 million plus properties are concentrated", said Leverett.

The other policy being touted before the election was a potential Rent Cap, but this has also quickly faded. The disadvantage for the UK from a restrictive rent cap would be the undermining of its Private Rented Sector, which is currently driving substantial capital inflows from overseas not only into London, but up and down the country.

Durrani concluded: "The London housing market is now poised to come out of a holding pattern that stalled growth in the lead up to one of the most closely contested elections in recent history. Vendors and investors withdrew from the market early in the year and activity was trending downwards across the board. While we do not anticipate a sudden surge in demand this year, the stability offered by a landscape of political continuity is expected to translate into a resumption in transactional activity, which will of course remain curtailed by a general lack of supply and restrictions on mortgage lending.

"Still, despite this domestic backdrop, GCC-based buyers are currently looking at a 8%-10% currency advantage due to the strength of the US Dollar. And with our forecasts showing house price growth of almost 18% over the next five years, the historic capital value growth appeal of London will continue driving inward investment. In fact, net inward institutional commercial property investment into the UK during Q1 was almost 150% up on the first quarter of 2014 and was led chiefly by dollar based funds, which accounted for 40% of the total, according to Property Data."

About Cluttons
Cluttons is a global real estate services company, with a presence in over 50 countries. Cluttons provides a wide range of commercial and residential property and facilities management, valuation, agency, telecoms and consultancy services. 2015 sees Cluttons celebrate its 250th anniversary, making it the oldest firm of chartered surveyors in the world.


Cluttons' clients range from international corporates and institutional investors, to private individuals and families. Founded in 1765, the firm now employs 700 staff worldwide and has a fast-growing international platform, including a network of offices in the UK, Europe, Middle East, Asia Pacific, India and Africa.

Cluttons is the trusted market leader in the Middle East where they have grown their presence and established a strong track record over the last 40 years.

For further information, please see: www.cluttons.com

Aindreas Doyle
Edelman
aindreas.doyle@edelman.com
00971566652045

© Press Release 2015