Insights: Why GCC residents are looking for property in Northern England

London has long been the favoured destination for investors from the Gulf.  However, new data from Nomo, the digital arm of the Bank of London and The Middle East, and Rightmove shows GCC residents are taking more of an interest in other areas of the UK.

Northern England and Scotland are becoming popular among property purchasers from the Gulf due to two key drivers — affordability and opportunity.

Encompassing major cities like Manchester, Liverpool, Glasgow, Edinburgh, Leeds, and Newcastle, the value proposition of investing in these areas is becoming greater and is appealing to investors and purchasers alike.

Affordability is appealing

Affordability is a cornerstone of Northern England’s appeal. Compared to London, where property prices are the highest in the UK, cities like Manchester and Liverpool present a more accessible entry point into the UK real estate market.

Make no mistake, London is still the most popular destination for GCC buyers, accounting for nearly one-in-four (24 per cent) enquiries made on Rightmove from the Gulf. Its global reputation, secure market, and status as an economic hub makes it a prime location for business and leisure alike. However, this all comes at a price.

In 2024, the average house price in London is GBP687,026 – which will often only buy a modest one- or two-bedroom flat in the most desirable areas. This is more than a £100,000 cash increase from 2014, when the average price was GBP576,000.

Affordability does not mean a compromise on quality or location. The average house price in Manchester is GBP264,250, Liverpool GBP207,438 and Leeds GBP274,675. For the cost of a flat in London, you can buy a property with substantially more space, a garden, and potentially better quality amenities. Add to this the fact that London is reachable in just under three hours from Manchester, many see this as a worthwhile trade-off for a more substantial asset.

The demand in the GCC for Northern property bears this out. Fifteen per cent of all GCC Rightmove inquiries are for the North West – greater than the ‘home counties’ in the South East (11 per cent), and the South West (9 per cent).

Five per cent of all inquiries are for Yorkshire and the Humber, home to the major Northern cities of York, Leeds and Sheffield, and a further 3 per cent for the North East. Combined, these three regions are almost as popular as London.

Northern England holds opportunities

A lower priced asset brings greater potential for high rental yields, if purchasers are looking for buy-to-let property. With lower acquisition costs in the North and potentially cheaper operational costs, a larger proportion of rental income contributes to returns.

The tenant demand in Northern cities is strong too, particularly among students. The cities of Manchester and Liverpool contain 12 universities between them – attracting hundreds of thousands of students looking for accommodation throughout the academic year. Seen as a safe investment due to the steady stream occupants, Nomo is increasingly providing property finance to GCC investors for this exact buy-to-let purpose.

But it’s not just the North’s many universities driving tenant demand. The area has long been a strategic priority for the UK Government to turn into a major economic hub – in recognition that the country’s economic output is too dependent on the South. The new government has continued this trajectory – recently investing GBP22bn in Northern-based carbon capture projects. As further investment is incentivised into the region, further job opportunities will be created, meaning more potential tenants.

Open for business

GCC investors make up 11 per cent of all international Rightmove enquiries for UK property, a disproportionate influence considering the six countries represent under 1 per cent of the world’s total population. This suggests that the longstanding links between the UK and the Gulf are going nowhere – and neither is Gulf investors’ appetite for UK property.

However, when investing in any foreign market, we strongly suggest using local advisers. Particularly in the North of England where there can be substantial differences in potential rental yields between neighbourhoods and towns, on-the-ground local knowledge helps ensure you make informed, strategic decisions.

The market trends strongly suggests that there will be continued interest in the North. Prices may increase in time, but the region will likely always be more affordable than the South. Those from the Gulf are recognising the opportunity this region brings, both in terms of making a first-time purchase of UK property and as a rental opportunity.

The writer is the chief commercial officer, Bank of London and The Middle East.