Real estate prices in central London increased the most in
nine months in August as wealthy investors sought a safe haven for their assets
amid fears of a global recession, Knight Frank said.
Values of houses and apartments costing an average of £3.7m ($6m)
rose 10.5 percent in the 12 months through August, the London-based consultancy
said, bolstered in part by Arab buyers.
“Middle Eastern investors definitely have a sector of the
market. Overseas buyers in general are boosting London property prices there is
just no question about that,” Grainne Gilmore, head of UK residential research
at Knight Frank, told Arabian Business.
“Prime London property is an investments class of its own
now, it’s decoupled from the rest of the UK market and it more closely
resembles other safe haven investments.”
The weakness of the pound coupled with fears of a global
recession and low base rate have helped push up the value of London’s prime
residential properties, the broker said in its August index
report. Real estate prices in the capital have increased 36.3 percent since
their recent post-credit crunch low in March 2009, said Knight Frank.
New buyers increased 11 percent in August compared to the
same period the previous year while viewings and offers increased 23 percent
and 13 percent, respectively, said the report.
“While purchasers buying with sterling
are now paying prices in excess of 2008 peak prices, eurozone buyers are still
able to achieve a 10 percent discount on 2008 prices and US dollar buyers an 18
percent discount,” said the report.
The UK’s recent riots have failed to dampen demand for
London real estate, which has a potential for significant double-digit growth
rate by the end of the year.
“It is too early to see any firm evidence, but the riots
seem unlikely to dent most international buyers’ desire for property in the
city,” said Knight Frank.
London property has long been seen as a safe haven for
investment for wealthy GCC investors. Real estate consultancy Savills in June
said MENA homeowners hold 13 percent of London’s most expensive property by
value with an average spend of £4m.
Harrods Estates, the property arm of the London-based
department store, last week said a Middle Eastern businessman had signed a
lease to rent London’s most expensive property at a cost of £55,000 ($90,000) a
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.
The company said it had seen a surge in demand from
investors from the Middle East, Asia and Russia. “Some 89 percent of our sales
are from high-net-worth individuals from overseas, particularly Russia, Middle
East and Asia, where we achieve our highest sales,” Shirley Humphrey, sales and
marketing director of Harrods Estates, said in a statement.
Luxury development One Hyde Park, which was launched to
great fanfare in January, broke world records for the most expensive price per
square foot at £6,000.
Buyers in the luxurious development, which includes 86
apartments overlooking either Hyde Park or Harvey Nichols, are said to include
Qatar’s Sheikh Hamad Bin Jasim Jaber Al-Thani and Mohammed Saud Sultan Al
Qasimi, head of finance for the government of Sharjah.
Between 20-25 percent of sales were to Middle East buyers,
with the cheapest apartment in the development costing £5.75m ($9.2m), Arabian
Business reported in June.
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