DUBAI: Harrods, the Savoy, the Shard — London property has long been a magnet for Gulf investors and Britain’s vote to leave the European Union is unlikely to dampen their interest, analysts say.
In fact, the Brexit vote could even see a surge in activity as wealthy Gulf buyers look to take advantage of the dramatic fall in the value of the pound.
Attracted to London property as both a sure-fire investment and for the cachet of ownership, Gulf investors have invested billions of their oil windfalls into British real estate.
CNBC Arabiya television recently reported that total Gulf investments in Britain amounted to about $200 billion, of which $45 billion was in real estate. And Britain accounts for 40 percent of all Gulf investments in European property, it said.
Monica Malik, chief economist at Abu Dhabi Commercial bank, said that with so much invested it would take more than the Brexit vote to shake Gulf confidence in the London property market.
“In the near term, there will be a sentiment of cautiousness but we do not expect a marked sell-off,” she said.
“A knee-jerk reaction or panic is unlikely,” she said.
“Property in the UK is very attractive and has been a well-performing asset class. The underlying foreign demand is expected to remain strong once the uncertainties subside.”
Top British assets held by Gulf owners include a 50 percent stake in London’s legendary Savoy hotel controlled by Qatar. The gas-rich state also owns the Shard skyscraper in central London and the Harrods department store.
A part of London has been dubbed the “Qatar Quarter” because so much property has been bought by the country’s investors. The London-based Rokstone estate agent estimated earlier this year that Qataris now own property worth more than one billion pounds in London’s poshest area, Mayfair.
“Qatar is one of the most high-profile investors in London, snapping up landmarks,” said M. R. Raghu, head of research at the Kuwait Financial Center (MARKAZ).
The royal families of the UAE are also known to hold prestigious assets in the British capital.
“Investors from the UAE accounted for more than 20 percent of buy-to-let property sales in the UK in 2015,” Raghu said.
Ownership levels are so high, Raghu warned, that a crash in British real estate would have a “huge impact” on Gulf investors.
But for now analysts expect to see even more buying of London property from investors in the Gulf Cooperation Council, where currencies are mostly pegged to the US dollar.
“The fall in the value of sterling could make the UK an even more attractive place for GCC nationals to invest in London property,” said Gulf expert Neil Partrick.
The Brexit vote “has weakened the pound and it will make property cheaper for investors” from countries where currencies are tied to the dollar, said Dana Salbak, an associate partner at the Knight Frank property consultancy.
“What we are seeing now, and we expect to see over the next couple of months, is that this activity (buying property) will pick up and they will start securing their purchases,” she said.
For Damian Wild, editor of weekly British property magazine Estates Gazette, “the medium-term story remains strong” because with the weakened pound “there is certainly a currency play to be had.”
Qatar, for example, is “heavily invested in London for the long-term and, short-term matters aside, there’s no reason why that shouldn’t continue,” he said.
And while Gulf investors have bought significant property assets elsewhere — especially the Qataris in Paris — Partrick said London would continue to hold a special place.
There is a “historical and linguistic familiarity” with Britain in the Gulf, where most GCC countries are former British protectorates, English is the de facto second language and sizable communities of British expatriates live and work.
Brexit vote unlikely to curtail Gulf appetite for UK property
Brexit vote unlikely to curtail Gulf appetite for UK property
Startup of the Week: Expanding to Saudi Arabia is ‘natural step’ for UAE proptech Holo, CEO says
- The initiative aims to raise the country’s homeownership rate from 47 percent to 70 percent by 2030
- Despite the growth opportunities, Hunter acknowledges challenges in the Saudi market
CAIRO: Expanding to Saudi Arabia is the “natural next step” for property tech startup Holo as the Kingdom seeks to increase home ownership, the firm’s CEO has told Arab News.
Michael Hunter, head of the UAE-based firm, is set to see his company expand its operations into the Kingdom, positioning itself to contribute to the ambitious housing and digital transformation goals outlined in Saudi Vision 2030.
The initiative aims to raise the country’s homeownership rate from 47 percent to 70 percent by 2030, a target that aligns well with Holo’s mission of delivering fast, transparent, and efficient mortgage solutions.
Hunter described Saudi Arabia as a “natural next step” for the company’s expansion, given the nation’s young, growing population and the flourishing real estate market.
“The Saudi Vision 2030, which aims to increase homeownership rates to 70 percent, presents a significant opportunity for Holo to contribute to this national goal,” Hunter told Arab News in an interview.
Expansion into Saudi Arabia
Despite the growth opportunities, Hunter acknowledges challenges in the Saudi market, particularly around market maturity and the regulatory landscape.
The current process of securing a home loan in the Kingdom, like in other markets, can be time-consuming. To address this, Holo will introduce its technology-driven platform, which delivers multiple mortgage options to consumers within days, significantly speeding up the loan comparison process.
“That is where Holo will step in, presenting a solution that directly addresses this issue by providing a rapid, transparent, and efficient platform,” said Hunter.
The company plans to leverage strategic partnerships and its technology to navigate these challenges and deliver value to Saudi consumers.
In adapting to the Saudi market, Holo plans to utilize the Kingdom’s advanced banking infrastructure to enable seamless integration and direct application processing for its customers.
“Saudi Arabia presents a unique opportunity to enable seamless integration and direct application processing for our customers within minutes,” Hunter said, highlighting a key advantage over other markets.
Holo also aims to introduce white-label solutions and offer artificial intelligence and machine learning tools to banking partners, further strengthening its market position and enhancing the value provided to financial institutions.
Hunter emphasized that Holo’s expansion into Saudi Arabia is not just about market entry but about aligning with the broader goals of Vision 2030.
“Our commitment extends beyond simply entering the Saudi market. We aim to deliver exceptional value to both consumers and financial institutions by offering a superior customer experience, optimizing banking processes, and adhering to global regulatory standards,” he said.
Impact and goals
Holo’s goal is to empower Saudi citizens to buy their own property, supporting the national objective of increased homeownership while contributing to the Kingdom’s digital infrastructure development in the real estate sector.
Holo’s online mortgage services aim to revamp the traditional home-buying process by offering a streamlined, user-friendly platform that connects borrowers with multiple lenders simultaneously.
According to Hunter, the platform’s efficiency lies in its ability to provide instant access to a wide range of mortgage options, allowing customers to compare interest rates, terms, and fees side-by-side in real-time.
“Unlike traditional methods, which often involve time-consuming paperwork and multiple interactions, Holo significantly reduces processing times and provides real-time updates throughout the journey,” Hunter explained.
In a new market like Saudi Arabia, ensuring the security and privacy of users’ data is a priority for Holo.
Hunter emphasized that the company adheres to strict cybersecurity standards and local regulations to protect user information at every stage of the digital mortgage process.
“We ensure that our users’ privacy is protected at every stage of the digital mortgage process,” he said, adding that Holo’s approach to security is consistent across all markets in which it operates.
As the company aims to expand globally, technology remains at the core of its operations, driving innovation in mortgage lending, which is traditionally a complex financial product.
Hunter emphasized the company’s focus on open finance and seamless integrations as it continues to evolve.
“Technology is our cornerstone for streamlining mortgage lending,” he said.
Looking forward, Holo aims to make the user experience even more fluid and efficient, leveraging technology to meet the needs of customers worldwide.
“We envision a home buying experience that is enjoyable and stress-free,” Hunter said, adding that through strong partnerships with key stakeholders, Holo plans to create a unified home-buying journey that benefits all participants.
“By year-end, we aim to process a significant volume of mortgage transactions and build a reputation for exceptional customer satisfaction,” the CEO added.
The company also plans to forge strategic partnerships to enhance its service offerings and adapt to the specific needs of the Saudi market. Building trust and credibility with new customers will be a priority for Holo, especially given the different cultural and economic landscape.
According to Hunter, this will involve a multi-faceted approach that emphasizes transparency, reliability, and exceptional customer service. “Early adopters will play a crucial role in shaping our brand and influencing future customers through their positive experiences,” he said.
Fundamentals
Hunter launched the company after more than a decade of experience in the banking and mortgage sectors across the MENA region.
Having witnessed the fragmented and often confusing nature of the traditional home buying process, Hunter saw an opportunity to address these inefficiencies.
“The process lacked momentum and clarity on costs,” Hunter explained. Inspired by innovations in more established markets, he and his team recognized a chance to leverage their local expertise and technology to streamline the mortgage experience for UAE homebuyers.
Holo aims to solve key problems in the home ownership and mortgage process, which are often complex, time-consuming, and lacking in transparency due to the involvement of multiple stakeholders.
According to Hunter, Holo simplifies this by offering a digital platform that provides instant access to a wide range of mortgage options, allowing users to easily compare offers from multiple banks.
“We empower homebuyers to easily compare offers from multiple banks and complete online applications with ease, significantly simplifying the entire process,” Hunter said. By centralizing these functions, Holo not only reduces the complexity but also brings greater transparency to the associated costs and terms, helping users make informed decisions quickly.
Since its launch in 2020 as part of the Wamda accelerator program in the UAE, Holo has achieved rapid growth.
The company scaled quickly, building a team of 60 professionals across the MENA region and processing a monthly mortgage volume of 600 million dirhams ($163.3 million) in the UAE alone.
Hunter highlighted that the COVID-19 pandemic further underscored the need for convenient, digital home buying solutions, which accelerated the company’s momentum.
“We prioritize capital efficiency and sustainable growth, allowing us to scale rapidly while maintaining our core values. With recent investments, we are excited to accelerate our expansion plans while staying true to our mission of democratizing home finance,” Hunter said.
Hunter’s insights
Reflecting on Holo’s journey so far, the CEO shared that the key lesson learned has been the critical value of customer feedback.
“By actively listening to our clients, we’ve uncovered key insights into the nuances and pain points of the home buying process,” he said, noting that this customer-centric approach has been crucial in refining Holo’s services to meet evolving needs.
As the company enters new markets, maintaining this feedback loop will be essential to ensuring that its solutions remain relevant and impactful across diverse real estate landscapes.
For other entrepreneurs looking to expand internationally, Hunter’s advice is clear: “Solidify your foundation before expanding.”
He went on: “Ensure your business in your home territory is robust and defensible. International expansion demands full commitment— it’s not a side project.”
For Holo, a strong presence in the UAE with solid unit economics has been a key enabler of its expansion plans. Only when a company’s core business is thriving, Hunter emphasized, should it consider moving into new markets.
Looking ahead, Hunter envisions Holo becoming a leading digital mortgage platform across the Middle East, North Africa, and Turkiye region within the next five years.
“Our primary focus will be on expanding our footprint and solidifying our market position in emerging markets,” he said.
Holo aims to be the preferred choice for both consumers and financial institutions seeking efficient and transparent mortgage solutions, driving innovation and growth across these territories.
Saudi expat remittances hit 25-month peak to reach $3.44bn
RIYADH: Expatriate remittances from Saudi Arabia reached SR12.91 billion ($3.44 billion) in July, reflecting an annual increase of 21 percent, according to the recent data.
Figures from the Saudi Central Bank, also known as SAMA, also revealed that transfers sent abroad by the Kingdom’s nationals rose by 0.25 percent year on year, totaling SR5.81 billion.
This follows a notable peak in May, which marked the highest value recorded in the past 18 months.
As one of the world’s largest sources of remittances, Saudi Arabia’s economic policies and labor market conditions directly influence the financial well-being of numerous households across the globe.
This trend not only demonstrates the Kingdom’s economic vitality but also its interconnectedness with the global economy, especially in terms of labor migration and cross-border financial support.
According to a report by the US Department of State, Saudi Arabia’s remittance system plays a critical role in the global economy, given that nearly 75 percent of the Kingdom’s labor force consists of foreign workers.
Saudi Arabia is one of the largest remittance countries, and there are no restrictions on converting or transferring funds related to investments, including dividends, or earnings.
This facilitates a seamless flow of money across borders, with no waiting periods required for sending funds through legal channels.
According to the report, a key aspect of the Kingdom’s remittance infrastructure is the Ministry of Human Resources and Social Development’s Wage Protection System, designed to ensure that expatriate workers — who form the backbone of the remittance ecosystem — are paid according to their contracts.
Employers are mandated to transfer salaries through local Saudi bank accounts, allowing expatriates easy access to send their earnings back to their home countries.
This system not only guarantees transparency but also provides a legal and efficient pathway for expatriates to support their families abroad.
Digital transformation
The remittance landscape in Saudi Arabia and the broader Middle East and North Africa region is undergoing a transformation driven by the rise of digital platforms.
Historically, these transactions were dominated by physical channels like banks and exchange houses, but technological advancements have paved the way for new solutions.
These digital platforms offer a more convenient, cost-effective, and efficient means for individuals to transfer money across borders.
The widespread use of smartphones and the internet has allowed users to send money anytime and anywhere, making digital remittances increasingly popular.
They also come with great advantages like competitive exchange rates, lower transaction fees, and faster processing times.
What once took days and involved paperwork can now be completed instantly, allowing recipients to receive funds almost immediately, which is crucial for many who rely on timely support.
Digital platforms have not only made remittances more accessible but have also contributed to financial inclusion, especially for underserved populations, such as migrant workers and individuals in remote areas.
These groups now have easier access to financial services, which helps bridge gaps in financial systems and promotes economic participation across different regions.
The growth has also been supported by financial institutions and fintech companies, which have embraced technology to develop their own digital platforms or partner with existing firms.
This collaboration has led to the creation of innovative solutions like mobile apps, online portals, and digital wallets, enhancing the customer experience and broadening the range of remittance options available.
Regulatory bodies in Saudi Arabia and the MENA region have also played a pivotal role in facilitating this transformation.
By implementing supportive policies that ensure consumer protection, promote competition, and foster an enabling environment for digital financial services, regulators have helped shape a secure and robust ecosystem.
These measures have encouraged the adoption of new technologies, allowing fintechs to operate within a well-defined regulatory framework.
As the industry continues to evolve, the integration of emerging technologies like block chain and artificial intelligence is expected to further revolutionize remittance services, making them even more efficient, secure, and accessible.
US interest rate cut could see funding taps turn on for GCC startups
RIYADH: After almost two years of rate hikes, the US Federal Reserve has slashed interest rates by half a percentage point to a range of 4.75-5 percent, but what does this mean for the startup and venture capital ecosystem?
The relationship between the US Federal Reserve and the global startup ecosystem is somewhat complicated.
Washington’s decisions on interest rates significantly influence the availability and cost of capital, which are crucial factors for startups and venture capital firms.
Lower interest rates generally make borrowing cheaper, potentially encouraging more investment into riskier asset classes, including startups.
Gulf Cooperation Council central banks followed suit in rate cuts, as their currencies are pegged to the US dollar.
Venture data analyst and founder of MAGNiTT, Philip Bahoshy, shares a nuanced perspective on the potential impact of rate cuts on the global and regional startup ecosystem.
In an interview with Arab News, Bahoshy said that the cut itself may not be the most significant, but rather, the potential trend expected to take place.
“To answer what impact will the cut have on VC investment, you need to understand why the Fed has taken this decision,” Bahoshy said.
“Ultimately, Jerome Powell (chair of the US Federal Reserve) says that the aim is to bring down or keep inflation steady while keeping moderate to low unemployment in the US,” he added.
“The signs are that we are trying to avoid a recession and/or an economic downturn in the US and that things are healthy, and therefore bringing down interest rates can help stimulate disposable income and people’s consumption,” the analyst said.
This, in turn, brings down the cost of capital, also known as the borrowing cost, which in turn makes VC a more attractive investment.
On the flip side, when interest rates are high, the implication of putting money in the bank or investing in less riskier options like real estate becomes the go-to for investors.
If an investor is earning 6 percent on a savings account, knowing that their money is secure, there’s little incentive to take on the uncertainty of investing in a startup, not knowing when or if they’ll get their money.
On the lending side, lower interest rates also make borrowing cheaper for startups.
Entrepreneurs, who are often very focused on maximizing every dollar, will appreciate the ability to borrow at lower costs which enables them to allocate more resources toward growing their businesses, rather than paying high interest costs.
Bahoshy has mentioned in previous reports that the decline in venture capital funding in the Middle East and North Africa region in the last couple of years has been, though not solely, due to high interest rates.
The MENA region saw a 34 percent year-on-year drop in funding in the first half of the year, compared to the same period last year.
In 2023, VC investments declined by 23 percent on an annual basis.
Interest rates and venture stakes
Bahoshy explained that the Fed’s last cut will not immediately impact VC investments, but the implication of continued rate reductions will.
“We anticipate that this will create a lower cost of capital for late-stage investors, more willingness for people to invest in other asset classes because fixed deposits become less attractive and, therefore, more investments going into venture in general,” Bahoshy said.
“My view is that the immediate impact will be somewhat limited. However, heading into 2025, if we continue to see rate cuts in the US, it will likely stimulate venture capital investments globally and in turn likely to return investor appetite for venture capital in the region. However, that’s likely not to impact Q4, more likely to impact 2025 positively,” he added.
Echoing Bahoshy’s prediction, Tushar Singhvi, deputy CEO and head of investments at venture capital firm Crescent Enterprises, feels somewhat positive that more cuts are underway.
Speaking to Arab News, Singhvi said: “The Fed rate cut sets the trend for a series of rate cuts expected over the next few quarters – this will result in higher liquidity in general, and the venture asset class will also benefit from higher liquidity.”
Short-term projections
Bahoshy pointed out that there have already been signs of growth in the VC landscape in the US in the first half of the year, which will probably be reflected in the MENA region.
“We noted back in the H1 report that in the US, we believe that we were reaching an inflection point and that we saw for the first time two consecutive quarters of growth in venture capital deployment,” he said.
“I anticipate that Q3 will continue to be higher globally and within the region, which is what the trends show and this rate cut will continue to support a potentially higher Q4 globally than Q3,” he added.
Bahoshy tempers his predictions, stating that the increase will be “moderate”, and not reaching 2021-2022 levels.
When it comes to startup strategies, the rate cut should hardly affect valuations or funding strategies, Singhvi said.
“Startups should continue to be as capital efficient as possible and focus on growth and profitability – and their funding strategies should be devised around that,” he added.
VC’s will most likely maintain their plan of action. Singhvi stated that the rate cut will not immediately change the focus areas of VCs in the region.
“VCs will continue to pursue startups which are building transformational businesses within high growth sectors and leveraging technology to build innovative and sustainable businesses,” he added.
Bahoshy also feels the same way. “I don’t think that a change in interest rates is going to impact sectorial shifts,” he said.
He highlighted that an even bigger concern exists within the startup ecosystem across the Middle East and North Africa.
“The biggest challenge for the region remains exits, liquidity and return on investments back to investors, which means that they have shown the success of their investment strategy and paid off their LPs (limited partners), increases risk appetite to raise new funds and to go into less traditional sectors,” Bahoshy said.
Singhvi adds that the increase of liquidity due to reduced rate cuts over time will definitely fuel exits in the region.
“There will be a positive impact of the rate cuts over time on exit strategies for VC backed companies as M&A (mergers and acquisition) activity will pick up and tech IPOs (initial public offerings) will also gain more momentum due to higher liquidity,” he added.
The geographical impact
When asked about whether the anticipated investment growth will be across the entire MENA region, Bahoshy said that the effects of the rate cuts might be more regionally dispersed rather than concentrated in key markets like Saudi Arabia and the UAE.
“When you look at the sovereign entities, whether it be Saudi Arabia, UAE, and Qatar, what’s more interesting to track is how does interest rate impact oil prices or natural assets that have been beneficial to the sovereign entities,” Bahoshy said.
He questioned whether this would “stimulate oil prices to increase because consumption has increased, or will this lead to a further reduction in the oil prices which have been a big stimulus to investment and wider growth of the economy and venture capital.”
Bahoshy added: “I don’t think that has necessarily a geographical specific impetus here in the region. In fact, many of the economies like the UAE and Saudi Arabia have performed better as a result of government focus and their ability to deploy capital during a time where other geographies haven’t.”
He went on to say that while the interest rate cut may be beneficial, there was a question over how it will impact oil and natural resource prices.
Late-stage startups, get ready
In the first half of the year, early-stage investments were the primary focus, with almost 75 percent of deals flowing in that direction.
Bahoshy explained that this trend could start to change in the next 12 months if interest rates continue to go down.
“However, I don’t think that this specific rate cut is going to stimulate that, but if we continue to see rate cuts to year end and into H1 2025, we may see a return of later stage investment while it’s healthy for early-stage investment to continue to grow,” he said.
Oil Updates – prices set to end week higher after US rate cut
BENGALURU: Oil prices eased on Friday, but were on track to register gains for a second straight week following a large cut in US interest rates and declining global stockpiles.
Brent futures were down 50 cents, or 0.67 percent, at $74.38 a barrel at 1:04 p.m. Saudi time while US WTI crude futures fell 48 cents, or 0.65 percent, at $71.47.
Still, both benchmarks were up 3.7 percent and 4 percent respectively on the week.
Prices have been recovering after Brent fell below $69 for the first time in nearly three years on Sept. 10.
“US interest cuts have supported risk sentiment, weakened the dollar and supported crude this week,” UBS analyst Giovanni Staunovo said.
“However, it takes time until rate cuts support economic activity and oil demand growth,” he added, regarding crude’s more muted performance so far on Friday.
Prices rose more than 1 percent on Thursday following the US central bank’s decision to cut interest rates by half a percentage point on Wednesday.
Interest rate cuts typically boost economic activity and energy demand, but some also see it as a sign of a weak US labor market.
The Fed also projected a further half-point rate cut by year-end, a full point next year and a half-point trim in 2026.
“Easing monetary policy helped reinforce expectations that the US economy will avoid a downturn,” ANZ Research analysts said.
Also supporting prices were a decline in US crude inventories, which fell to a one-year low last week.
A counter-seasonal oil market deficit of around 400,000 barrels per day will support Brent crude prices in the $70 to $75 a barrel range during the next quarter, Citi analysts said on Thursday, but added prices could plunge in 2025.
Crude prices were also being supported by rising tensions in the Middle East. Walkie-talkies used by Lebanese armed group Hezbollah exploded on Wednesday following similar explosions of pagers the previous day.
Security sources have said the Israeli spy agency Mossad was responsible, but Israeli officials have not commented on the attacks.
China’s slowing economy also weighed on market sentiment, with refinery output in China slowing for a fifth month in August and industrial output growth hitting a five-month low.
Saudi Arabia’s expat fee waiver fuels industrial growth, boosting GDP by 14.7%
JEDDAH: Saudi Arabia’s decision to waive fees for expatriate workers in the industrial sector has significantly contributed to a robust 14.7 percent increase in gross domestic product, soaring from SR392 billion ($104.5 billion) in 2019 to SR592 billion in 2023.
According to a report by the Economic Studies Center at the Federation of Saudi Chambers, this policy has not only spurred GDP growth but also enhanced non-oil exports, which have climbed to approximately SR208 billion, marking a 12 percent increase since 2019.
Effective until Dec. 31, this initiative is part of the Kingdom’s broader strategy to stimulate growth and attract investment in its industrial sector. The report also notes that the opening of new markets and the signing of various trade agreements have played crucial roles in this upward trend, with the local content value in non-oil sectors reaching SR1.14 trillion by the end of 2023.
Over 8,000 industrial firms have benefited from the waiver, which eliminated around SR5 billion in expatriate labor fees. The analysis highlights that this policy has encouraged industrial establishments to adopt innovative business models, localize advanced technologies, and attract skilled professionals, ultimately increasing the availability of products to meet local demand.
The number of products bearing the Saudi quality mark has also seen a rise, reflecting enhanced product quality. A comprehensive analysis conducted by the Saudi Press Agency evaluates the decision’s impact based on seven economic indicators, including GDP contribution, the growth of industrial establishments, and investment volumes.
Key findings indicate that the industrial sector’s GDP surged from SR392 billion in 2019 to SR592 billion in 2023, with a 14.7 percent contribution rate. The number of industrial establishments grew from 7,625 in 2019 to 11,868 in 2024, a growth rate of 55.6 percent, while investments in the sector increased by 54 percent, reaching SR1.5 trillion compared to SR992 billion.
Moreover, the report reveals a substantial rise in foreign investments due to government support measures, such as covering financial fees and implementing the local content system. The number of foreign factories jumped from 622 to 1,067, reflecting a 71.5 percent growth rate, while invested capital soared from SR43 billion to SR93 billion, marking a staggering 116.2 percent increase.
In terms of employment, the industrial sector employed around 1.2 million workers by the end of the first quarter of 2024, with 358,000 being Saudi nationals, resulting in a 28 percent Saudization rate. Workers in this sector accounted for 12.9 percent of all nationals employed in the private sector.
The report underscores that various government incentives have encouraged the private sector to increase Saudization, creating more job opportunities for citizens. The industrial sector emerged as the largest contributor to job creation for Saudis between Jan. 1, 2023, and March 31, witnessing a 59 percent increase with over 82,000 new jobs added.
