The Bank of England’s 0.5 per cent interest rate increase will potentially lead to a downward adjustment in property prices, which could open up opportunities for Middle Eastern investors, experts have said.
“The interest rate hikes in the UK were expected, in line with global markets, and with continued inflation, further interest increases are anticipated,” said Alex Casaki, head of the London desk at property consultancy Core.
“As the cost of borrowing increases, potential adjustment in sales prices, coupled with a strong dollar, will present further opportunities for Middle Eastern real estate clients who are less dependent on lending.”
The BoE raised interest rates from 1.25 per cent to 1.75 per cent on Thursday, the largest increase since 1995, and warned of a looming recession.
The bank’s Monetary Policy Committee made the widely-expected decision as part of attempts to bring inflation under control.
It has been criticised for moving too slowly to combat inflation, which currently stands at a 40-year high of 9.4 per cent, forced upwards by rising food and energy prices.
It is the sixth consecutive increase in the bank rate since December and the biggest individual leap in 27 years. The previous five increases had not been more than a quarter point.
The British pound has weakened more than 10 per cent against the dollar this year as rampant inflation, a weakening economy and the Russia-Ukraine conflict have encouraged investors to sell the currency.
Increasing interest rates have a dampening effect on asset markets in the near term, especially for investors who have mortgages and those dealing with the challenge of rising inflation, said Sameer Lakhani, managing director of commercial lender Global Capital Partners.
“For international investors, especially at the higher end of the market, the impact will be lower and greater emphasis will be placed on the exchange rates,” Mr Lakhani said.
“Nonetheless, as the BoE has indicated, that there is a high likelihood of a recession ahead. Real estate prices will moderate, especially after the extraordinary run up that they have had in the last year.”
UK house prices dropped by 0.1 per cent, month on month, in July, marking the first decrease in more than a year, according to mortgage lender Halifax. They had risen by 1.4 per cent in June.
Leading indicators of the housing market have recently shown a softening of activity, while rising borrowing costs are adding to the squeeze on household budgets, said Halifax managing director Russell Galley.
“Some of the drivers of the buoyant market we have seen over recent years — such as extra funds saved during the [coronavirus] pandemic, fundamental changes in how people use their homes and investment demand — still remain evident,” Mr Galley said.
“The extremely short supply of homes for sale is also a significant long-term challenge, but serves to underpin high property prices.”
Real estate company Zoopla said this week that house price growth in the UK will come to a halt if mortgage rates hit 4 per cent, with values expected to dip if rates climb above that level.
Mortgage lender Lloyds Banking Group also said last week that it expected house prices to fall by 1.4 per cent next year.
The increase in interest rates in the UK could also lead many international property investors to consider exiting the market as they look for opportunities elsewhere in the world, in places such as Singapore, Zurich and Dubai, according to Rosie Patterson, mortgage channel manager at property broker Better Homes.
“Once they realise Dubai offers exceptionally low property prices per square foot, compared with the most iconic cities, as well as an average gross rental yield between 5 per cent and 9 per cent, we will see an additional influx of international buyers,” Ms Patterson said.
“Dubai’s property market will continue to see an increase in Arab and international investors and be the lead benefactor of millionaires relocating from across the world. Dubai offers high-net-worth investors prime real estate with all the top amenities at four times less the price compared with other leading capital cities, making the city desirable for investors across the globe.”
Looking ahead, further rate increases will have a "crippling effect" on the general UK population, leading to over-extended financial commitments, which in turn could trigger a recession and bring down house prices and rents, according to Lewis Allsopp, chief executive of Dubai real estate broker Allsopp & Allsopp.
“As a result, it would make sense for Arab and international investors to diversify their investment strategies into buying in their local markets where sentiment is strong and offers a better return on investment,” Mr Allsopp said.
“Long term, the UK always offers great investment through property, but in the current climate, I would suggest letting it cool down before jumping in at the top end and picking up some better-priced options once the market has settled.”
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Company name: Play:Date
Launched: March 2017 on UAE Mother’s Day
Founder: Shamim Kassibawi
Based: Dubai with operations in the UAE and US
Sector: Tech
Size: 20 employees
Stage of funding: Seed
Investors: Three founders (two silent co-founders) and one venture capital fund
Dunbar
Edward St Aubyn
Hogarth
The biog
Siblings: five brothers and one sister
Education: Bachelors in Political Science at the University of Minnesota
Interests: Swimming, tennis and the gym
Favourite place: UAE
Favourite packet food on the trip: pasta primavera
What he did to pass the time during the trip: listen to audio books
The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
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Specs
Engine: Dual-motor all-wheel-drive electric
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The biog
Fast facts on Neil Armstrong’s personal life:
- Armstrong was born on August 5, 1930, in Wapakoneta, Ohio
- He earned his private pilot’s license when he was 16 – he could fly before he could drive
- There was tragedy in his married life: Neil and Janet Armstrong’s daughter Karen died at the age of two in 1962 after suffering a brain tumour. She was the couple’s only daughter. Their two sons, Rick and Mark, consulted on the film
- After Armstrong departed Nasa, he bought a farm in the town of Lebanon, Ohio, in 1971 – its airstrip allowed him to tap back into his love of flying
- In 1994, Janet divorced Neil after 38 years of marriage. Two years earlier, Neil met Carol Knight, who became his second wife in 1994
SPAIN SQUAD
Goalkeepers Simon (Athletic Bilbao), De Gea (Manchester United), Sanchez (Brighton)
Defenders Gaya (Valencia), Alba (Barcelona), P Torres (Villarreal), Laporte (Manchester City), Garcia (Manchester City), D Llorente (Leeds), Azpilicueta (Chelsea)
Midfielders Busquets (Barcelona), Rodri (Manchester City), Pedri (Barcelona), Thiago (Liverpool), Koke (Atletico Madrid), Ruiz (Napoli), M Llorente (Atletico Madrid)
Forwards: Olmo (RB Leipzig), Oyarzabal (Real Sociedad), Morata (Juventus), Moreno (Villarreal), F Torres (Manchester City), Traore (Wolves), Sarabia (PSG)
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
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Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Mohammed bin Zayed Majlis
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Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
Three tips from La Perle's performers
1 The kind of water athletes drink is important. Gwilym Hooson, a 28-year-old British performer who is currently recovering from knee surgery, found that out when the company was still in Studio City, training for 12 hours a day. “The physio team was like: ‘Why is everyone getting cramps?’ And then they realised we had to add salt and sugar to the water,” he says.
2 A little chocolate is a good thing. “It’s emergency energy,” says Craig Paul Smith, La Perle’s head coach and former Cirque du Soleil performer, gesturing to an almost-empty open box of mini chocolate bars on his desk backstage.
3 Take chances, says Young, who has worked all over the world, including most recently at Dragone’s show in China. “Every time we go out of our comfort zone, we learn a lot about ourselves,” she says.
Asia Cup 2018 final
Who: India v Bangladesh
When: Friday, 3.30pm, Dubai International Stadium
Watch: Live on OSN Cricket HD
Awar Qalb
Director: Jamal Salem
Starring: Abdulla Zaid, Joma Ali, Neven Madi and Khadija Sleiman
Two stars
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
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Available: Now
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
What's in the deal?
Agreement aims to boost trade by £25.5bn a year in the long run, compared with a total of £42.6bn in 2024
India will slash levies on medical devices, machinery, cosmetics, soft drinks and lamb.
India will also cut automotive tariffs to 10% under a quota from over 100% currently.
Indian employees in the UK will receive three years exemption from social security payments
India expects 99% of exports to benefit from zero duty, raising opportunities for textiles, marine products, footwear and jewellery
