Investors hold back from UK property deals on Brexit fears

Sovereign and private investors from Qatar, Saudi Arabia, Kuwait and the United Arab Emirates have been prolific buyers of British assets in the past decade, snapping up billions of dollars worth of property, mostly in London.

"Sovereign wealth funds are concerned that Brexit is taking its toll on the property market in London," said a London-based lawyer who works with some of the largest Gulf funds. He declined to be named, citing the confidential nature of his work.

"The situation will further deteriorate if there's a Brexit vote."

The value of residential property in upmarket areas popular among Gulf investors - including Chelsea, South Kensington and Knightsbridge - fell between 3.5 and 7.5 percent on the year in May, according to estate agent Knight Frank.

Gulf family businesses and private investors are heavily involved in London real estate.

Investors from the UAE accounted for more than 20 percent of buy-to-let property sales in the UK in 2015, said Amit Seth, the Middle East and North Africa head of international residential developments at London-focused real estate agency Chestertons.

"At the moment it seems clear people are little bit more sceptical on making an investment today because of Brexit," said Seth, who is based in Dubai, referring to private Gulf investors in residential real estate.

He said investors were still researching opportunities and discussing them with his company, but not finalising deals.

While the precise impact on Gulf investments is unclear, overall flows of foreign capital into commercial real estate in Britain stopped in the first three months of 2016, Bank of England Governor Mark Carney said in April. Business investment in the country also fell in early 2016, statistics showed this week.