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Tue 6 Dec 2011 08:08 AM

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Arab buyers told to look past luxury London real estate

Wealthy investors should diversify from ‘golden postcodes’ to bump up returns, says agency

Arab buyers told to look past luxury London real estate
Houses along Kensington Palace Gardens, Londons most expensive street according to
Arab buyers told to look past luxury London real estate
A general view of a house along Kensington Palace Gardens, which has been named as Britains most expensive street on June 1, 2011 in London, England. A recent property survey estimates the average house price of the street to be 19.2 million GBP. Many of the mansions are occupied by billionaire businessmen, embassies and ambassadorial residences. (Getty Images)

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.”

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.

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
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.

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

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prices in the London borough of Islington have outperformed all other areas
with annualised returns of 11.5 percent compared to 2.8 percent in the City of
London, said IP Global.

high performing projects include the Cobb Street, Myrdle Street and Mulberry
projects in Tower Hamlets offering 4.5 percent.

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.

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.

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.