Britain is the first investment destination in the commercial and residential real estate sector, and a safe haven for real estate investment due to its economic components, political position and legislative climate. Therefore, it remains stable despite the successive setbacks it is going through, which if another country went through, it would witness a clear stumble, and a real deterioration.
Despite Britain’s approaching “the abyss of economic depression” as a result of the decline of the pound sterling to its lowest historical level against the US dollar (it lost about 16%) and the rise in inflation rates, London comes at the top of the list of Kuwaiti citizens’ preferences at the investment and tourism level, which made the decline In the exchange rate of the sterling pound, an uninterrupted conversation between citizens, some of them are looking for an opportunity to have a permanent foothold in London by entering into an investment directly, but they are waiting for the right time to make a decision, especially since the mere depreciation of the currency is not the only motivating factor, reports a local Arabic daily.
Specialists believe that the international investor knows with certainty that he is exposed to the risks of fluctuations in currency exchange rates, which are among the ABCs of investing outside the borders of the state, whether it is in real estate, traded shares or any other customary investment.
At the outset, the CEO of the Real Estate Investment Department at Kamco Invest, Muhammad Fahad Al-Othman, said that the decline of the pound sterling against the US dollar would create many opportunities in a number of sectors, with the benefit being in the medium and long term.
He added, “If we look at the UK economy, the most prominent sectors revolve around the services and real estate sectors, and therefore we see that most of the opportunities that will result from this decline are in these two sectors.”
“The real estate sector,” he said, “in all its categories, whether commercial, investment or residential, has maintained its position during the challenges that the markets have experienced, especially during the past years, which indicates that it will become more attractive, especially for foreign investors.”
For his part, the economic expert, Muhammad Ramadan, believes that the declines in the sterling exchange rate since the beginning of the year may not constitute a threat now, but rather an opportunity, especially since the decline comes in the context of a corrective currency prices compared to inflation rates without a collapse in the prices of the sterling pound. It is a real reflection of raising interest rates in order to tame inflation.
Ramadan said that the situation in important cities in Britain is more stable, and usually exceeds economic problems due to its global economic and financial importance, pointing out that we have not witnessed a significant decrease in the prices of defensive assets such as real estate of all kinds and other assets that respond flexibly to changes in conditions, whether the change in rates Inflation or exchange rates to maintain their stability so far.
Britain announced late last week a 45 billion pound (about $48.4 billion) tax cut and massive new borrowing to cover it, shocking markets and causing a crisis of confidence in the new British government’s ability to rescue the country’s faltering economy from the brink of recession.
Ramadan believes that the decline in the exchange rate of “sterling” is going at relatively acceptable rates, creating real investment opportunities for many who wish to start their businesses in Britain for several reasons that can be listed as follows:
1 – Lower cost: Individual investors from Kuwait can now seize opportunities at a lower cost, especially that the decline in the exchange rate of the pound sterling against the dinar by about 20% since the beginning of the year may constitute a favorable opportunity for those who want to enter into a new investment, as the cost of investment will be reduced by close to the rate of change In the exchange rate if he chooses the investment at the correct timing and asset.
For example, at the exchange rate of 420 fils per pound sterling, each dinar was equal to 2.3 pounds, while with the exchange rate reaching, for example, the level of 320 fils per pound, each dinar equals 3.12 pounds, which means that the Kuwaiti investor who will enter into a new investment will increase the value of Its liquidity is available in sterling, which enables it to acquire more comfortably.
2- Stimulus plans: the British government’s announcement of tax cuts and investment incentives with the aim of boosting economic growth rates is another new opportunity for those wishing to invest in London, but the quality of investment will make a difference to benefit from those incentives.
Ramadan touched on the fact that investing in government securities and bonds in London has a different calculation than defensive assets, as changes in the exchange rate and interest directly cast a shadow on this aspect, not to mention that each security has its own data, so it is not possible to judge the entire sector, but rather Investments in this aspect can be qualitatively evaluated, especially since there are opportunities at a lower cost in it as well, and rewarding cash dividends and returns can be obtained from them, and the exact opposite can happen.
Ramadan stated that Kuwaiti government investments can reduce concern about them in the current situation, especially that the Kuwait Investment Authority is working according to professional strategies through which it can distribute investments sectorally and geographically, not to mention waiting for opportunities such as the current opportunity to enter into new investment as this crisis has certainly generated many opportunities that have not been lost on the authority that deals with the matter professionally.
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