Gulf house buyers widen interest in London

Arab real estate investors picking new targets other than super prime areas like Mayfair
Gulf house buyers widen interest in London
(Photo for illustrative purposes only)
By Andy Sambidge
Sat 19 Jan 2013 09:48 AM

Gulf investors are expected to pick new targets in London's prime residential real estate market this year with a move away from super prime mansions.

Property buyers in the English capital are seen growing in 2013 but will be looking to purchase in areas away from their traditional hotspots, according to UK real estate firm Knight Frank.

Historically, Arab investors have sought out huge trophy assets in the exclusive Mayfair, Knightsbridge and Belgravia but Knight Frank said it is seeing a shift in attitudes.

Seb Warner, Knight Frank partner in international project marketing, said Middle East, and particularly UAE investors, are now seeking out prime markets rather than just super prime.

He said London areas now being targeted include Marylebone, the West End and the City.

The price difference between super prime and prime can be as much as double with super prime rates of about £3,000 per sq ft.

Such is the growth in interest from UAE buyers that Knight Frank said it is actively returning to the Gulf state to promote development projects.

Knight Frank is planning 4/5 visits to the UAE to promote key development projects in London before the summer.

Warner told Arabian Business: "We are definitely starting to see that Middle East money is diversifying into other locations in London.

"It tightened up a bit but bigger amounts are returning to London from Middle East investors."

He added: "We see the number of prime residential investors from the region rising this year - they know London, they like London and it is still very much a safe haven for investors from the Middle East."

Warner said: "Super prime has always been strong and will continue to be so but the key is how more Middle East investors will go into London's prime market this year."

Middle East investors made up more than 15 percent of London's super-prime real estate market between 2010-2012.

Only buyers from the UK (33 percent) and Russia (18.7 percent) were more active in the £10m-plus property sector.

His comments come as Knight Frank release a new report on overseas investment in new-build residential properties in the English capital last year.

It showed that overseas investors channelled a total of £2.2bn into the new-build sector in central London in 2012, up from £1.8bn in 2011.

Buyers from the UAE and Saudi Arabia each made up one percent (£22m) of the total, the report said, adding that investors from Singapore and Hong Kong accounted for 40 percent of purchasers of new-builds.

The report said a third of overseas investors buying off-plan buy property with their children’s education in mind, planning to use at least one property for their children to live while they attend a London university.

UK buyers remained the largest segment, accounting for 27 percent of transactions in the new-build market, broadly similar to 2011, Knight Frank said.

In November, Knight Frank said Middle Eastern buyers had piled into London's luxury home market in October as they shielded their wealth from political turmoil back home, including the Syrian civil war.

While the trend is not new, a sharp increase in buying in October suggested wealthy citizens in some Middle Eastern countries believe their security is continuing to deteriorate, even as politics become more stable elsewhere in the region.

Buyers from countries including Egypt, the UAE, Israel and Jordan spent 50 percent more on London property in October than they did in the same month last year, paying an average 3.5 million pounds ($5.6m).

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