Dubai: Middle Eastern investors are increasingly showing appetite for London real estate and snapping up houses in some of the British capital’s most high-profile developments, analysts said.
Paul Preston, head of IP Global Middle East, said that whereas in the past Middle Eastern residents were buying London properties for personal use, today they are betting their money on properties that are seen to offer a good return on their investment.
The clear winner among the properties in the market so far are the high-profile developments within the City of London, also known as the Square Mile, which have seen substantial growth in recent years, despite property prices rising by 15.3 per cent over the past 12 months.
However, certain alternative locations that offer great value, such as those that have not registered rapid price increases but are seen to benefit from soon-to-open transportation links like the Slough Crossrail station are beginning to pique the interest of some property buyers.
“Investors in the Middle East do seem to have an emotional draw to London. People understand London and they see it as a great place to travel to and love the British heritage,” Preston told Gulf News.
“I personally think that more and more people are buying property in London for investment purposes, whereas in years gone by, the trend was GCC buyers buying in London more for personal use.”
Analysts at Jones Lang LaSalle (JLL) said investors from the region have been drawn to Central London real estate because of the city’s position as a capital and a finance hub. There has been a strong demand for housing within the city’s financial district, which accounts for 350,000 workers.
“Middle Eastern investors have strong historic links to the London property market. London’s position as a capital city and financial centre, alongside its stable political system and transparent legal framework, continues to attract interest from across the Middle East,” said Adam Challis, head of residential research at JLL.
Dina Alam, head of development sales and city residential office at JLL said that the real estate market in London has strengthened significantly, thanks to a strong demand from the overseas market.
“Given that London’s financial district has 350,000 workers by day but only 8,000 residents, we are not surprised that there is high demand for housing in this area- particularly new developments.”
In 2013, buyers snapped up 12,000 units in the Square Mile development, registering a 63 per cent rise from 2012 sales. One of the best performing projects in the area has been The Heron, which has profited from the rising London property market. Since the launch of the development in 2010, prices have gone up by as much as 40 per cent, and only a selection of the Penthouse Collection remains unsold.
However, Preston said investors can find fantastic value outside popular areas that have seen rapid price increases. Locations worth investing in are those that will soon benefit from the introduction of new transportation links.
“More prime locations such as Knightsbridge and Kensington, for example, have increased rapidly in price over the last two to three years and therefore it’s hard to see that very top echelon of the market continue to grow at such pace,” he said.
“The areas that I like are locations such as Lewisham, Deptford and Bromley that have not yet seen that same price rise but are likely to do so as the London ‘ripple effect’ continues and the government and private sectors continue to spend money on improved transport links and regeneration projects.”
He said the highest performing locations in London have been those that will benefit from the imminent introduction of the Crossrail system. “Such locations have previously been less popular but, due to shorter commute times into Central London, more and more buyers and tenants will be looking at such locations in search of value.”
