The next few months will likely see a growing number of GCC nationals looking for UK homes to purchase. The Gulf’s hot season has begun, bringing average daily temperatures of 45℃. It’s no surprise, therefore, that many will be escaping the heat with a trip abroad – and Britain’s temperate climate makes it an especially popular destination.
Projections show that there will likely be around 1.2 million visits from the GCC to the UK in 2024, with the majority arriving during the Gulf’s summer season from May to September.
The UK’s leading schools and universities make it particularly attractive to GCC nationals, many of whom graduated from one. It’s also common for the region’s residents to send their children to school or university in the UK – and with the academic year kicking off in the coming months, many will be using the opportunity to look at properties.
The current economic environment, too, signals an optimistic picture for GCC buyers looking to purchase a UK home. British house prices fell at their fastest pace in over a decade during 2023, recovering only marginally since then.
House prices in one of the GCC’s largest housing markets of Dubai, on the other hand, increased to record highs last year.
It’s a marked distinction to the slowdown in house price growth across the developed world, including in Britain, after the cost of homes soared in many countries during the pandemic.
This contrasting picture on house prices is a key factor driving GCC nationals’ appetite for UK property assets – so is the rate of economic growth in the Gulf, which will put more of its residents in a position to purchase. GCC economies are projected to grow faster in 2024 than they did last year, and eight out of 10 GCC organisations plan to increase employee salary and benefits.
The UK’s housing market will become even more attractive to GCC buyers if and when the Bank of England cuts the base rate – which it is likely to do if inflation drops further. The market, by and large, expects that to happen: the FTSE 100 index of blue-chip stocks recently rose 0.3% on hopes of rate cuts this summer.
The Bank of England itself has not dampened this optimism: After its latest announcement, Governor Andrew Bailey said there had been “encouraging news” on inflation and that it would fall close to the Bank’s 2% target in the next couple of months.
“We need to see more evidence that inflation will stay low before we can cut interest rates,” he said. “I’m optimistic that things are moving in the right direction.”
Commercial factors are making it more attractive for GCC customers to buy a house in Britain. But the UK markets appeal is broader still.
One of the UK’s lesser-known strengths is its Islamic finance sector, which is larger and more diverse than that of any other Western country. Britain has more Islamic banks and lenders than any other comparable country, and that makes it especially appealing to customers from the middle east – where around nine in 10 people are Muslim.
As a place to live, Britain holds a wide range of attractions to customers from the Gulf, and it’s clear that the next couple of months are going to be a busy time for Sharia compliant property finance providers in the UK.
Alan Fitzpatrick is head of property finance at Nomo
