28 May 2015
Muscat: The European Union has been at the centre of financial difficulties since the Great Recession, with positive economic news from the bloc remaining limited. With the Omani Rial pegged to the US dollar and performing strongly, investment in European property is expected to rise markedly, according to leading international real estate consultancy, Cluttons.
European allure
Faisal Durrani, Cluttons' international research manager explained: "There is no doubt that the performance of the US dollar has unlocked the door for a significant potential upturn in cross border property investment. The weakness of the Euro means that Rial buyers are now about 23% richer than this time last year, in Euro terms. This clearly makes an EU based property investment particularly attractive.
"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 (~ OMR 1.19 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 an 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."
Muscat: The European Union has been at the centre of financial difficulties since the Great Recession, with positive economic news from the bloc remaining limited. With the Omani Rial pegged to the US dollar and performing strongly, investment in European property is expected to rise markedly, according to leading international real estate consultancy, Cluttons.
European allure
Faisal Durrani, Cluttons' international research manager explained: "There is no doubt that the performance of the US dollar has unlocked the door for a significant potential upturn in cross border property investment. The weakness of the Euro means that Rial buyers are now about 23% richer than this time last year, in Euro terms. This clearly makes an EU based property investment particularly attractive.
"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 (~ OMR 1.19 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 an 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."
© Times of Oman 2015
