Dubai: London and New York are the top preferences of the UAE’s super-rich looking to invest $1 million and more in real estate this year, while the South Indian metropolis of Bengaluru comes in as a bit of a surprise as the third referred. Two other Indian cities, Ahmedabad and Mumbai, pick up positions fifth and 10 in the rankings put together by the real estate consultancy Cluttons.

Singapore was fourth, while Berlin, Chicago and Istanbul were sixth, seventh and eights respectively. Los Angeles and San Francisco had the ninth and 11th ranks.

None too surprisingly, Dubai and Abu Dhabi were the runaway choices as the preferred destinations of Middle East based investors.

“Dubai is both the leading target investment location as the ‘most preferred’ city as well as being the most commonly mentioned city in investors’ top three preferred locations in the Middle East,” the Cluttons report states. “Thirty per cent of UAE HNWI [high networth investors] name Dubai in their top three most preferred cities, followed by Abu Dhabi at 23 per cent.” (Sharjah and Muscat came in third and fourth.)

According to Steven Morgan, Chief Executive of Cluttons M.E., “The strength of the dollar has certainly contributed to the strong appetite for global property investments, particularly in the face of mute local and international economic conditions, which have been traditional triggers for capital flight to perceived investment safe havens.”

Cluttons finds the presence of three Indian cities in the top global rankings as “unsurprising”.

This is “reflecting personal ties as well as a push for FDI [foreign direct investment] from among the Indian diaspora by the Indian government,” the report says. “The recent state visits by the UAE and Indian leadership may have boosted the appeal of a ‘home’ investment among the UAE’s non-resident Indian community.”

India’s developers sure have taken notice, with a slew of super-luxury projects being marketed extensively in the Gulf over the last six months. The passage of the much delayed Real Estate Regulatory Bill by the Indian Parliament will also be giving a boost to the property markets and buyer sentiments.

That London still reigns supreme in the list of preferred investments destinations for the UAE’s wealthy is also a bit of a surprise. For one thing, there is the 3 per cent stamp duty for buy-to-let investors and second-home buyers from April 1.

But, according to Cluttons, those who can afford London properties are only keen to take the longer term view. “It is our expectation that most buyers will take a long-term view of the market as many perceive the 3 per cent increase in stamp duty rate a small price to pay for securing a London asset,” it notes. “The sentiment very much remains that most investors would still rather be a buyer than a seller. In fact, we have recently seen some landlords strengthening their portfolios.”

No one can quibble with their reasons — since Q1-2009, prime Central London values have “soared” by 70 per cent. In turn, they more than compensated for the 20 per cent dip from the market peak during Q3-2007 and Q1-2009.

Chelsea, Kensington and Canary Wharf are the top locations among some high net investors in the UAE. “While our Experian (forecasting) model suggests growth in 2016 will reach just over 4 per cent, our expectation is for this to come in nearer the 2.5-3 per cent mark for prime Central London as a whole,” the report adds.

“However, there are still pockets in and around prime core areas such as Marylebone, Paddington and Bayswater, where current average rates of 1,300 pounds per square foot are attracting a high volume of value driven buyers and investors, which is likely to drive up residential property prices by a much stronger rate.

“Similarly, domestic demand is expected to remain centred on properties priced between the 500,000-1 million pounds mark, which remain in short supply. In Chelsea and Belgravia, transactional activity remains centred on homes valued at £1 million. So again, there is a high potential for stronger growth in this supply starved slice of the market.”

But there are concerns of a political nature. This relates to the stance the majority of UK citizens will take in the June 23 referendum on whether the country should remain a part of the EU or not.

“Our preliminary figures suggest a stabilisation in values across the prime Central London market, with the uncertainty surrounding the outcome of the referendum to exit the EU being amongst the key macro drivers dampening growth rates,” said Faisal Durrani, Head of Research, Cluttons.

“That aside, the central issue of affordability remains a central issue for buyers, even in the face of London-Help-to-Buy, particularly as the £600,000 cap on the purchase price of a property doesn’t allow access to any core locations.”