Zeenat Shaffi, Senior Business Development Manager, Nomo Bank, gives an insight into how For UK developers and property agents can tap into home buyers from the GCC
The UK has long been an attractive destination for international property investors, with a stable market and a reputation for strong returns. In recent years, investors from the Gulf Cooperation Council (GCC) countries – including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – have been increasingly interested in UK property as a way to diversify their portfolios and take advantage of the country's favorable investment climate. Last year, Middle East buyers accounted for nearly 11% of all property transactions in London, one of the world’s most attractive investment markets.
With markets returning to pre-pandemic levels, and a weaker pound creating financially viable opportunities, buyers from the region are once again looking to the UK’s property sector. For investors in the buy-to-let category, rental income continues to reach new highs especially in major cities like London as supply continues to reduce.
However, the home buying journey can be time-consuming and complicated. This is largely due to buyers not being present in the market, the lack of visibility through the process and more recently, fast-changing interest rates which impacts budgets.
For UK developers and property agents looking to tap into these home buyers, there are several considerations to keep in mind with a view to closing transactions fasters, as demand grows.
Understand Cultural Nuances
UK brokers must be aware of and respect the cultural norms, values, and business practices prevalent in the GCC region. This understanding is crucial in building trust and establishing long-lasting relationships with investors. It's important to recognize that these investors may have different expectations and communication styles, and may value personal connections and face-to-face meetings more highly than other investors. Building relationships with local partners who can provide introductions and facilitate communication can be a key advantage in attracting GCC investors.
Incentivise new-build Investors to Overcome Challenges and Ensure Deal Completion
According to recent data, it now takes only 44 days to sell a home in England and Wales which means buyers and agents must work together to get the home they want. However, new-build buyers often have to face challenges in getting financing due to the high deposits required. These lengthy processes could mean that home buyers could lose the property of their dreams.
It’s therefore important to actively communicate with all stakeholders regularly, across the entire home purchase journey. Providing a digital onboarding experience for GCC customers like what Nomo Bank offers to open a UK account and support direct debit can be a valuable offering for new-build buyers. Property agents and developers must also create incentives for investors to increase the attractiveness of a deal with a view to close sooner.
To attract GCC investors, UK developers and property agents should also be prepared to offer customized services that meet the unique needs and preferences of this market. In addition, offering language support and translation services can also help to build trust and improve communication.
Offer Sharia-Compliant Financing Options
Sharia-compliant financing must not be used to support industries or activities that violate the principles of Sharia. Money must be put to good use in order to make profit from a legitimate commercial or economic activity. It is illegal to pay or receive interest (making money from money). By providing access to Sharia-compliant financing options, real estate professionals can cater to the preferences of GCC investors and facilitate the investment process.
For property finance products like Commodity Murabaha involves the lender facilitating a sale an asset to you for the amount equal to the finance amount and bank profit-rate. This amount will be repaid on a deferred basis over the chosen finance period. This is especially important for investors who prioritize investments that align with their religious beliefs.
Sharia finance also has a difference in the terminology used. For example, it's important to note that "interest rates" are not a concept that is compatible with Sharia law, but instead "profit rates" are used as an alternative. UK developers and property agents should also be prepared to explain how Sharia-compliant financing works and provide transparency around the costs and fees associated with these options.
Highlight Rental Yields and Investment Returns
GCC investors prioritize investments that offer good stability, returns, and steady cash flows. UK developers and property agents should use accurate market data to demonstrate a competitive advantage over other international markets. Despite some market fluctuations, the UK property market has historically been a strong performer, the average UK house price rising 6.3% in the 12 months to January 2023. Emphasizing the potential for rental yields and long-term investment returns can be an effective way to attract GCC investors.
Discover opportunities beyond London
For GCC investors, buying a home in London has been the traditional ambition. It is a city that they’ve been familiar with over multiple generations. However, with time, cities such as Manchester, Birmingham and Liverpool are seeing demand from property investors as these regional locations have lower priced units, deliver higher yields and come with new build warranties.
These regional areas are also becoming popular as they can be purchased as residents where their children can stay whilst studying at universities outside of London
For property agents and brokers, this presents an opportunity to help investors diversify their property search and explore homes in new regions, where they could potentially get significantly more value for money.
Be Prepared for to offer additional services
While the UK property market can be an attractive investment opportunity for GCC investors, there are also potential challenges to consider. This can include practical considerations such as suggesting a UK bank account that supports Direct Debits for gas and electricity bills, or tax services for those who come from tax-free GCC countries. Additionally, agents must be prepared to support issues arising out of changes in government policies, interest rate hikes and fluctuations in currency exchange rates.
UK developers and property agents should be prepared to address these challenges and provide transparent and accurate advice to investors. Building strong relationships and providing excellent customer service can also help to mitigate potential disruption in the home buying process.
(About the author: Zeenat Shaffi is the Senior Business Development Manager at Nomo Bank. Nomo Bank is a UK-based, Sharia-compliant digital bank. It’s designed for people with international lifestyles who want to manage their money easily through smart, simple and secure technology.)
