Unlike the common practice of being able to passively rely on assured rental income from real estate assets, owners today are stepping up to actively manage their properties – especially if they want to optimize regular returns and also realize capital gains, according to Bank of London & The Middle East (BLME).
This trend has been especially noticeable in the UK residential property sector as investors adjust to minimize the impact of the COVID-19 pandemic and Brexit, shared Rashid Khan-Gandapur, the real estate finance director at BLME.
Being actively involved in refurbishment and development financing, Rashid told IFN Investor BLME saw the UK real estate sector – long viewed as offering attractive Shariah compliant assets by GCC investors – undergo a slump until property owners saw ways to pivot strategies for improved returns.
When interest rates went very low through 2020, making it cheap to borrow, asset prices went up. When interest rates got hiked, it forced out many private landlords stuck with these high-priced assets – if they didn’t have the benefits of operating at scale or enjoy tax efficiency.

Amid this bleak backdrop of capital losses from forced sales and weaker tenancy demand post-pandemic, Rashid said BLME noticed a key pattern develop among more resilient owners, especially Gulf investors.
“In spite of Brexit and the last two years, net migration into the UK has averaged about 700,000 per annum. And that creates its own demand for housing.”
While most would typically look at single family homes and student accommodation for opportunities, “the more exciting and newer segment is in co-living, which is a bit like student accommodation for young professionals”.
Rashid noted: “As a provider, you can achieve economies of scale and also offer a service that is very attractive to the rental market that you can achieve above-average returns.”
Following the removal of supply as many private property owners exited the rental market plus the increase in demand from increasing immigration, Rashid said the prospects for managed residences looks especially bright in cities like London, where there are many new employees.
“Gulf investors are coming into the UK market realizing that it is alright to face hassles for 12 months to undertake such conversions in residential properties as they can make a really significant return in the next 12 to 24 months. Therefore, the hassle is worth it.”
Note: BLME observations on the UK commercial property sector trends in part 2 of this report.