Shariah lending parity drives Piccadilly’s new property investments

The landscape of UK real estate financing, especially for investments, is undergoing a profound shift as Shariah compliant capital moves from the fringes to the competitive core of the market.

Andre Henderson-Stewart, co-founder of Piccadilly & Co, argues that the Islamic premium in lending has vanished, with Shariah financing now matching or even beating conventional bank rates.

The assertion that Islamic finance has reached parity with traditional lending is a central pillar in the 2026 strategy of Piccadilly, a realtor with a US$2.8 billion acquisition record.

Nearly "90% of the offices that we will be buying will be Shariah compliant anyway" Andre shared, noting that the vast majority of Piccadilly’s acquisitions naturally met ethical standards.

Islamic lenders like QIB and Al Rayan now "offer very competitive rates," which are "sometimes even more competitive than [conventional] banks or the lending institutions."

This parity is a cornerstone of Piccadilly’s new GBP400 million (US$535.41 million) Brompton Capital fund, which targets recovery in the UK commercial sector. The fund's ambitions are further bolstered by the appointment of Dr Mohammed Yamani as co-founder, whose 16-year tenure as CEO of Dallah Albaraka saw him oversee more than EUR3.2 billion (US$3.7 billion) in assets.

The competitive pricing allows Piccadilly to maintain its target leverage of 50% without sacrificing the returns expected by its sophisticated investor base. By removing the "Shariah premium," Piccadilly is able to bid aggressively on Core+ assets in London and other high-growth UK cities.

GCC investors plowing back into UK realty

As the market enters a "new, more positive cycle" in 2026, GCC investors are leading the charge back into British property, Andre observed. Currently, 86% of investment inquiries for these strategies originate from the UAE, Saudi Arabia and Qatar.

Despite shifting tax landscapes, these investors increasingly view the UK as a "stable and competitive destination" for long-term capital preservation.

Piccadilly is also capitalizing on a "two-speed" London market where secondary offices face obsolescence while prime residential demand remains insatiable. Their project near Google’s UK headquarters serves as a flagship case study, converting underutilized office space into high-value residential units.

Andre confirmed that Piccadilly secured the asset with a lean equity requirement, allocating only GBP3 million (US$3.79 million) to trigger the initial phase of the development. A four-year income stream from the property is anticipated before the units are sold one at a time, rather than through a bulk sale, to maximize capital gains.

Andre identified regional hubs in the North and Midlands as providing significantly larger yield spreads than the capital. Cities like Manchester and Birmingham are increasingly favored by GCC buyers seeking 5.5% yields compared to lower returns in central London.

To mitigate "value-add" risk, Piccadilly also strictly acquires assets that already have planning permission for change-of-use, like with the project near the Google site.

‘First mover’ advantage for 2026?

The UK property market is entering a "new, more positive cycle" as realtor JLL predicts a 15% investment surge, reaching up to GBP48 billion (US64.25 billion) in 2026. Piccadilly aims to capture nearly 1% of this volume, positioning itself as an agile first-mover while institutional competition recovers.

With regional investment expected to hit GBP5 billion (US$6.7 billion), Piccadilly’s focus on the North and Midlands could command up to 13% of that local pool, said Andre.

By launching early, the firm targets a "generational buying opportunity" for high-quality assets before returning institutional giants compress yields. Piccadilly’s office-to-residential conversions are specifically designed to outperform the general 15% market uptick by leveraging critical housing demand.

The Brompton Capital fund targets a 7% annual compounded return for its initial five-year term. Its structure for sophisticated Islamic investors features a 1.5% management fee and a 20% performance fee split after year five.

Piccadilly’s regional strategy is further bolstered by the UK’s new 10-year social rent settlement. Starting April 2026, a permitted 4.8% hike – based on CPI plus 1% –provides the long-term, inflation-linked certainty required for North and Midlands "living" sector investments.

To simplify its brand for global investors, the firm has dropped the Peregrine identity, bringing its operations under the overarching Piccadilly name. In a stroke, this removes friction for global allocators while providing a unified, professional wrapper for Shariah compliant mandates, explained Andre.

By timing the launch of its Brompton Capital fund for early 2026, Piccadilly aims to stay ahead of a major institutional surge that could soon drive down investment returns. This strategy allows the firm to deploy capital as a first-mover, securing high-quality assets before a predicted flood of institutional capital fully compresses market yields.