From Riyadh to Nottingham: Al-Jisr stays agile in reshaping GCC market

As war grips more of the Middle East, the traditional "safe haven" allure of London real estate might matter more than ever for Gulf investors.

Concerns over the security of GCC capitals with proximity to Iran could prompt investors to beat a tactical retreat toward the UK’s centuries-old legal stability, says Al-Jisr Properties, a Shariah-focused boutique firm that bridges GCC money with London real estate.

"Obviously what's happening with the ongoing geopolitical situation massively improves the attractiveness of the London market," George Colley, managing director at Al-Jisr, shared with IFN Investor. "The London market has the oldest and safest legal framework ... and there's going to be a lot of investors that want to bring their money out of the GCC and into the UK market."

George remains a staunch advocate of the Saudi market, saying the Kingdom offers investors an unparalleled window into the GCC.

“There are huge opportunities in commercial real estate, especially in relation to the sectors that are prioritized in Vision 2030, with a much higher or a comfortably higher upside than you would have in some of the more mature Western markets. I'm most focused on Saudi Arabia, but internal rate of returns are very, very dependent by city, right?”

In the high-stakes world of Shariah compliant real estate, the pendulum of investor sentiment typically swings back and forth between the East and West.

While the glitz of Riyadh’s skyline and the aggressive yields of the GCC are powerful attractions, Europe’s relative political stability – albeit “boring” returns – can resonate with investors wanting to preserve their money as much as grow it.

A protracted Iranian war, with the threat of contagion, could intensify fund flows towards underserved European assets, including strategic real estate.  

Al-Jisr, with its dual focus on both the Saudi and UK markets, says the “alpha" of absolute return in London real estate could also be found in remote, matured markets like Nottingham, north of the English capital.

While George warns of a "stigma" on buildings 10 years or older in Saudi Arabia that can drag on capital appreciation, he sees the UK's aged stock as a different kind of opportunity.

Matured properties, in Nottingham for instance, were subject to mispricing that had often forced institutional investors to exit these assets at a discount.

Value-add investors like Al-Jisr then emerge to acquire these structurally sound buildings, perform a Grade-A refurbishment and "reset the clock” – capturing the cap rate compression as the asset moves back into prime category. Alpha is captured on resale.

"I think the real opportunity will be in the value-add space," George explained. “Commercial to residential is a strong value-added opportunity... to refinance as well.”

Nottingham, in particular, has caught Al-Jisr’s eye as it looks beyond shiny new glass towers and towards the bones of the UK’s industrial past as it tries to navigate the UK’s high-interest-rate environment to deliver outsized returns.