A growing demand from Middle East investors is being seen for more affordable, high-quality homes in London’s outer zones, according to new research.
Data from Barratt London, part of the largest residential property development company in the UK, and Rightmove, the largest online real estate portal, have identified the ‘Cinderella’ areas, so-called due to their upcoming transformation, similar to that of the well-known fairy tale.
They are mainly made up of active regeneration areas that haven’t yet seen huge gains already witnessed in central London, including Chelsea, Belgravia and Knightsbridge.
According to the research, Middle East investors are attracted to areas within Greater London, including Hayes, Hendon, East Ham, Catford, Tooting, Hounslow and Acton, all of which offer a lower initial purchase price and the likelihood of substantial capital gains.
Stuart Leslie, international sales and marketing director at Barratt London, said: “In recent months, due to restricted movement and lifestyle changes, there has been a shift in demand among Middle Eastern buyers towards higher yield, lower-priced properties, indicating a boom in investment purchases.
“Traditionally, buyers from Gulf regions, who now make up 15 percent of overall sales, have looked to central Zone 1 areas with many purchasing properties as a second or third home.
“Now, however, we’re seeing a move towards more affordable, high-quality homes in London’s outer Zones 3-6, which offer rental yields of around 4 percent – far higher than is attainable in central London.”
The data also revealed investors from Kuwait and Bahrain made up the majority of interest in the lower-price-point, higher-yield products.
However, demand has also increased from investors from Saudi and Qatar, traditionally focused on prime central areas while UAE investors tend to be expats looking to put down roots in London.
Leslie added: “The Cinderella areas have really piqued the interest of investors from the Gulf region due to the potential returns compared to their glitzier gentrified neighbours where house prices have already reached their peak.
“As a result, we have seen a clear uptick in enquiry levels and are therefore very optimistic for the forthcoming year where we expect these levels to increase even further.”
His comments come as JLL predicts that in 2022 the Greater London area will see growth outweigh that of the rest of the UK – 6 percent as opposed to 4.5 percent – and that this trend will continue for the next four years, leading to an anticipated increase in London house prices of 25.8 percent compared to 21.7 percent elsewhere in the country.
James Puddle, founder and CEO of One Global Group, one of Barratt London’s selling agents, said: “London has lagged behind in the property boom of 2021, as buyers and renters looked out of the capital and city centres. However, we have already seen the trend reversing and more people coming back to the capital. We expect London to be one of the top performers in 2022.
“Buying in London doesn’t need to break the bank, there are a number of locations primed for growth. With the delivery of key infrastructure in the coming years – such as Crossrail – many areas are becoming more accessible and desirable to live.”
Barratt London’s top Cinderella neighbourhoods include Acton, East Ham, Harrow, Tooting, Hounslow, Hayes, Wembley and Hendon.
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