Wealthy investors should diversify from ‘golden postcodes’ to bump up returns, says agency
Luxury homes in London’s prime central areas offer attractive investment opportunities to Arab buyers, but investors should look beyond the city’s “golden postcodes” to maximise their returns, property consultancy IP Global said.
Arab Spring unrest has spurred fresh interest in the city’s luxury properties as wealthy buyers seek a safe haven from the political turmoil, but investors should broaden their portfolios, the Hong Kong-based company said in a report.
“We are encouraging our clients to diversify their portfolios into new London boroughs, in order to open up new opportunity,” Robert Pearce, director of IP Global, said in a statement. “Throughout 2011, GCC investors have increasingly viewed the London real estate market as a relatively ‘safe haven’ for capital… we expect this trend to continue into 2012, as Middle Eastern investors seek long-term stability through real assets, amidst increasing volatility in global equity and bond markets.”
London property has long been seen as a safe haven for investment for wealthy Arab buyers. This interest, coupled with the city’s shrinking number of prime properties and a weak pound, helped push the value of prime residential properties to a record in October, Knight Frank said.
Luxury home prices in the UK capital have soared 40 percent since March, the consultancy said in November. Values of properties costing an average of £3.7m ($5.9m) rose by an average of 12.5 percent in October from a year earlier, the London broker said, bolstered by Arab buyers.
“The ramifications of the Arab Spring are still not fully played out – buyers from this region are still looking to invest in London,” the company said.
Harrods Estates, the property arm of the London-based department store, said in August a Middle Eastern businessman had signed a lease to rent London’s most expensive property at a cost of £55,000 ($90,000) a week.
The firm said it had seen the average cost of its rented property increase to £4,285 from March to date compared to £1,955 the same period the previous year.
Property valuations across the capital have produced average annualised unleveraged returns of 8.1 percent and leveraged annualised returns of 11.9 percent, IP Global said in its report.
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