Quarter of Gulf investors won't use properties abroad

A quarter of all Gulf investors buying property overseas are targeting “buy-to-leave” homes that they don’t intend to live in or let out, brokers have said.

According to data compiled by property brokers Cluttons and polling company YouGov, 26 per cent of 127 high-net-worth investors from the Middle East looking to buy property over the coming year said they plan to neither use it as a main property or lease it out.

Instead, investors said they planned to use their new property as a “second residence”, many of which are unlikely to be lived in at all.

One in four respondents said they were purely motivated by capital gains and were hoping to cash in on London house prices that have skyrocketed by 70 per cent over the past seven years.

“Our research confirms the sentiments of many that London is perceived to be lined with gold bricks, with the residential returns outperforming mediocre stock and bond markets in recent years,” said Faisal Durrani, the head of research at Cluttons.

“This lock-up and leave attitude has been a political hot topic and often cited as a main driver of rising values and diminishing affordable stock.”

A third of respondents said that their local economies were worsening or destabilising, which has fuelled a desire to look for investment opportunities abroad.

More than half of those surveyed (55 per cent) said that they already had an international property portfolio and 17 per cent named London as their preferred choice from 196 global destinations.

Moreover, 63 per cent said that they were likely to invest in their preferred location this year.

According to Cluttons, house prices in prime central London increased by 4.6 per cent in the 12 months to the end of the first quarter this year, while residential yields averaged 3.7 per cent.

The broker predicts cumulative capital growth throughout the next five years will reach 19.1 per cent.


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