Real Estate

Gulf investors put $100m into London property fund

September 24, 2024, 9:39 AM

Gulf London property Staple Inn — A once-in-a-decade softening of prices is helping to make the London market especially attractive at the moment, it is claimed

Fund is shariah-compliant
London ‘especially attractive’
Targeting $2bn for fund

Gulf investors have given $100 million to a shariah-compliant fund run by the alternative asset manager Rasmala Investment Bank in Dubai to spend on the London residential property market.

Adnan Adil, an investment director at the bank, told Citywire that he has seen interest from Gulf investors already well acquainted with real estate in London and looking for a chance to buy into a large portfolio without having to manage it directly.

“We are also seeing a lot of interest from Muslim investors in the UK due to the lack of viable and attractive sharia-compliant instruments in the Middle East,” he said.

Multiple industry analyses in recent months have suggested UK real estate may again become attractive for wealthy GCC residents as interest rates fall and the country’s political situation stabilises after the Labour Party won the July general election in a landslide.

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Rashid Khan-Gandapur, director of real estate finance at the Bank of London and The Middle East, wrote in a column for AGBI in mid-August that Gulf investors may put as much as $4 billion annually into UK commercial properties “given a growing consensus that market conditions will continue to improve”.

The Rasmala shariah-compliant residential real estate fund was established in May 2023 to target a “multifamily” portfolio that the bank hopes will exceed $2 billion in value over five years. The multifamily market is a term used to refer to the residential real estate industry, covering both rental and for-sale apartments.

Rasmala has yet to respond to a request for comment.

Proven stability over time, a supply crunch that keeps housing in high demand, and a once-in-a-decade softening of prices in core or sought-after suburban areas are among the factors that make the London market especially attractive at the moment, Adil told Citywire.

Other industry observers, however, have expressed doubts about the UK property sector’s continued appeal.

Labour’s tax plans in particular have prompted speculation that GCC investors that own assets in the UK might want to do away with them sooner rather than later, which would cause a cooling in demand.