Middle East-based investors are rushing to invest in London’s real estate market following the relaxation of travel rules between the UK and the UAE, according to property advisor Savills.
Stan Ennor-Glynn, head of International Residential Sales Middle East said he is seeing a “surge in activity” as lockdown restrictions are gradually lifted.
After the central London market bottomed out in 2014, the easing of lockdown restrictions and subsequent return to the capital resulted in annual house price growth of 1.4 percent in the third quarter – the second consecutive three-month period of growth.
Ennor-Glynn (pictured below) said: “The relaxing of lockdown restrictions and office workers returning to the UK capital have resulted in an influx of Middle Eastern investment into London’s prime residential market.
“As international travel is gradually reintroduced, we anticipate a more pronounced price increase in this market, which has been long overdue. We anticipate prices to end the year around 2 percent higher in 2021, with annual price growth reaching 8 percent by the end of 2022.”
Savills said prime London locations such as Notting Hill (+4.6 percent), Bayswater (+3.3 percent), and Holland Park (+2.6 percent) – popular with Gulf-based investors – have been driving growth in the capital, which has been fuelled by high demand for larger homes with gardens.
The value of homes with six or more bedrooms has increased by an average of 6.2 percent in the last year, while five-bedroom properties have increased by 5 percent.
The rising demand for larger residences has resulted in a 2.7 percent increase in prices outside of central London on an annual basis.
Lucian Cook, head of Residential Research at Savills, added: “Throughout the pandemic, families searching for larger space and outdoor areas have been the driving force in the prime London market. These buyers have been encouraged by the low interest rate environment, which has masked the impact of the stamp duty holiday’s phased withdrawal.
“However, as we return to normalcy, we are seeing an increase in prices across a broader range of property types. Year-on-year capital value growth for two and three-bedroomed homes in London’s most desirable neighbourhoods has now entered the positive territory.”
Over the next five years, UK property prices are forecast to increase by 25.1 percent. London’s suburbs and the wider south – which have benefited from buyers relocating from more central locations – are set to lead Britain’s rapid property capital appreciation, growing at 26 percent and 25.7 percent respectively. Prime central London is expected to experience five-year growth of 21.5 percent.
According to Knight Frank, Middle East buyers accounted for 16 percent of all UK real estate purchases sold to overseas buyers in the first three months of this year – the highest proportion since the pandemic.
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