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Sat 17 Dec 2011 02:06 PM

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Arab home buyers in London see prices rise $1,865 per day

Prime real estate in English capital rise average of 12.6% in 2011, says Knight Frank

Arab home buyers in London see prices rise $1,865 per day
Values of properties in London rose $1,865 per day according to Knight Frank

Arab investors who have snapped up prime real estate in London have seen prices rise more than £1,200 ($1,865) per day over the past year, according to new research by Knight Frank.

The real estate company said prime London property prices rose 1 percent in November, contributing to annual growth of 12.6 percent.

Its report said prices have risen 39.5 percent since their post-credit-crunch low in March 2009 and prices are now at a record high, 6.2 percent above their previous peak in March 2008.

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.

Average prices for prime central London properties - which has seen an influx of buyers from overseas including the Middle East - have hit £3.19m, meaning that a typical prime London property has risen in value by more than £1,202 per day over the past year.

Knight Frank said the volume of new sales instructions has risen by 15 percent over the past year.

It added that the number of exchanges and the volume of sales being agreed have risen by 17 percent and 25 percent respectively over the past year.

Price growth over the last 12 months has averaged 12.6 percent, with the strongest rise (16.1 percent) recorded in the £2.5m to £5m bracket, a popular sector for Arab buyers.

Those fortunate to have bought a £5m property will have seen price growth equivalent to £2,205 per day, Knight Frank said.

The growth has taken place against the backdrop of ever-worsening global economic news and rising threats of a second credit crunch, the company added.

"Our analysis of market activity in the three-month period to November, compared to the same period in 2010, confirms a positive picture of demand and sales activity, demonstrating that the increasingly apocalyptic news headlines are not having a significant impact on the prime London market," Knight Frank said.

"Despite growing global economic instability, our forecast for the prime central London market in 2012 is for positive price growth, but at a slower pace than we have seen over the past two years. We are expecting a rise of 5 percent across the whole of next year."

Harrods Estates, the property arm of the Qatar-owned department store, in August 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 week.

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.