Why the Middle East is Investing in the UK’s Silicon Valley

Key Findings:

• The UK recognised as one of the most promising countries for technology breakthroughs
• Saudi Arabian ‘tech-preneurs’ move attention to the UK market
• This follows investment into Slough via the Abu Dhabi Investment Authority (AIDA)
• Over $7.7 billion invested into UK startups during 2018 according to KPMG

Tech companies around the world have been among the major beneficiaries of wealthy middle eastern nations looking to diversify their economy and become less reliant on oil and gas-based revenue.

At the forefront is Saudi Arabia, who spent the past few years investing its oil riches into US tech brands including Uber, Tesla and Magic Leap. Typically, the United States has been the main beneficiary of mass oil and gas reserves from the Arab “tech-prenuers”, but a new contender has emerged and its good news for the United Kingdom.

The UK is recognized as one of the most promising countries in the world for technology breakthroughs on a global scale. Over $7.7 billion was invested in UK startups during 2018 according to KPMG and the UK was ranked 3^rd for countries expected to produce the most ‘disruptive technologies’. Such recognition has undoubtedly had a positive effect on foreign investment into the UK technology sector, as the Saudi Arabian fund recently purchased an $8 billion 25% stake in British supplier ARM, a semiconductor and software company. (entreprenuer.com)

Despite the negative press surrounding Brexit, the UK tech sector has outperformed the wider UK economy, growing from £170 to £184 billion between 2016 and 2018, increasing twice as fast as the rest of the nation’s economy. (www.technation.io/insights/report-2018).

Where did this exponential growth take place?

For over 30 years, the UK’s technology sector has grown along the M4 corridor where a list of global technology brands such as Oracle, IBM and Microsoft call home. Labelled the ‘UK’s Silicon Valley’, the tech corridor stretches throughout Berkshire and the Thames Valley, surrounding property hotspots such as Slough, Reading and Bracknell.

The increased attention these commuter belt towns have received worldwide has generated significant foreign direct investment from middle eastern investors, but it’s not only into the technology sector. Millions of pounds have been invested in local real estate as the ensuing effect of a booming technology sector has resulted in increased demand for residential and commercial properties. For example, Slough’s Queensmere and Observatory shopping centres were recently sold for £130 million to the Abu Dhabi Investment Authority (AIDA). Slough is only not experiencing a £450 million pound regeneration scheme but is also the new headquarters of French telecoms operator, Orange who join a long list of Slough-based tech giants such as Telefonica, Virgin Media and O2.

Towns located along the UK tech corridor have seen substantial growth in terms of property prices. Slough has seen price increases of 53% since the global recession while Bracknell has seen a staggering 60% growth (www.zoopla.com)

Bracknell is another key hub in the UK’s Silicon Valley thanks to tech conglomerates such as Dell, Hewlett Packard, Vodafone and Fujitsu calling the town home, while a £770 million “Bracknell Forest” regeneration scheme sweeps through the region. Real estate in Bracknell has unsurprisingly been a major attraction for Middle-Eastern investors. A Kuwait-based firm Global Investment House has completed the acquisition of the UK and European headquarters of 3M in Bracknell in a combined £200 million ($288.5 million) deal. Nasser Alkhaled, senior vice president of real estate asset management at Global, said: “This acquisition comes as further proof that in a short period of time we have built on-the-ground capabilities to identify opportunities for our clients who seek to invest in quality assets which yield attractive long term income”. (www.ArabianBusiness.com)

Whether its technology or real estate, the UK’s Silicon Valley should be on every investor’s radar looking to capitalize on one of Britain’s most profitable sectors.

For further information on the investment case for property hotspots in the UK’s Silicon Valley, please download your free guide here: https://sevencapital.com/online-brochure/uk-silicon-valley-guide/