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Gulf investors look to European property

Global Arab Network - - John Short

Monday, 05 October 2009 13:53

The global financial crisis has not been bad news for all. For investors with cash to spare wishing to invest in the more established property markets, there are numerous opportunities arising to obtain prime property at a reasonable price. This is particularly so for investors from the Middle East wishing to invest in the UK property market. The strong dollar (to which the UAE Dirham is pegged) and the fall in UK property prices has lead to an increased interest in investors from the Middle East, who are interested in taking advantage of what amounts to up to 50% savings available on properties in the UK market, in particular London private properties and prime UK commercial properties. Some sources are quoting this increase in demand for London property to be around 17% by the beginning of July, which is traditionally the start of the summer buying period for such investors.

The UK property market has long been regarded as a good long term investment experiencing very few bear cycles and long term overall growth. This coupled with the correction in UK property prices over the past year and the fall in the stock markets has made the investment in this mature, transparent and well regulated market increasingly attractive to investors seeking an alternative to stock market investments. The knock-on effect for Jersey has been that there has been a renewed interest and increased demand for Jersey-based structures to be utilised by investors (in particular from theMiddle East) to invest in the UK property market. These structures have ranged from Shari’a-compliant trusts to be used to hold second residences in London, to full-blown investment vehicles targeting multiple commercial properties. Jersey, in particular, lends itself to these types of structures due to the flexibility of structures available here. From the standard family trust through to the unit trust, foundation, Special
Purpose Vehicles and very private funds, right up to the protected cell and incorporated cell companies which can be used for multi-investor and/or multi-investment products (such as facilitating Islamic banks to offer Ijara mortgages), the Island has pioneered cost-efficient and legally watertight structures to suit all types of investor and investment.

A further attraction of Jersey is that it is a well-regulated jurisdiction which investors can trust. Jersey has worked hard over the past few years to ensure that there are a wide variety of levels of regulation in order to ensure that various regulatory regimes are available to take into account the risk of the product and the experience and wishes of the investor, some recent examples of which are the launch of the unregulated funds regime in 2008 and foundations earlier this year. Furthermore the speed and simplicity of the process of establishing structures such as unregulated funds provides Jersey with an advantage over competing European and offshore jurisdictions and consolidates its position as a domicile of choice particularly for specialist property funds.

For non-European investors looking for a second residence France, Jersey has one further added attraction for place of domicile of the holding entity, the imminent removal by France of the annual 3% tax on the gross value of French property for investors based in Jersey. This will bring Jersey into line with Europe. Investors outside of Europe (and a limited amount of other countries) will still have to pay the 3% annual tax making investment in French property through a Jersey-based vehicle an attractive proposition.

For investors from the Middle East, Jersey, and in particular Volaw and Voisin, has a proven track record and experience in developing Shari’a-compliant pioneering structures, with Voisin and Volaw jointly responsible for launching some of the very first Shari’a funds in 1996 and remaining at the forefront of innovation of offshore Shari’a-compliant structures ever since. Voisin and Volaw, therefore, are ideally placed to advise investors from the Middle East upon suitable structures with which to invest in UK or European property.

Global Arab Network

Kate Anderson, an Associate in Voisin’s Commercial Team, and Trevor Norman, Volaw’s Director of Islamic Finance & Funds Group review current investment opportunities in real estate.

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Last Updated on Monday, 05 October 2009 14:00

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Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network