This summer, Middle Eastern buyers have been enjoying London’s attractively priced property market, snapping up residential investments across the capital.
Historically, there have been many factors driving Middle Eastern investment into London. The ongoing geopolitical tensions at home and, more recently, price levels, which are currently 35 per cent below peak for those with US-backed currencies – the best it has been for some 30 years.
This year, we are witnessing two more motives spurring on this resurgence of investment.
US President Trump’s controversial temporary travel ban earlier this year has encouraged Middle Eastern buyers back to the capital. After the stamp duty tax hike in 2014, London lost a number of Middle Eastern clients to America.
Until that point, they had favoured locations closer to home and would regularly visit London and acquire another property for their portfolio. But they looked to diversify in the US buying up real estate in New York and other major cities.
The president’s temporary ban on a number of Muslim-majority countries entering the US has made London look far more investor-friendly again and a number of Middle Eastern clients have returned to resume their search.
We are also seeing a rise in interest from a new generation of Middle Eastern investors. The profile of buyers is now a younger set, which is partly due to inheritance tax raids on their family’s wealth.
US President Trump’s controversial temporary travel ban earlier this year has encouraged Middle Eastern buyers back to the capital.
Offspring are now being educated to follow in the footsteps of their fathers who invested in prime central London in the 80s at the last major dip in the property cycle.
We are now witnessing an equivalent currency advantage and the young are being increasingly urged to buy now.
Middle Eastern families have always been familiar with Knightsbridge, Mayfair and Belgravia because of family excursions in their younger years to these areas. The properties in demand are generally lateral two, three and four bedroom apartments from £2m–£7m.
However some investors are now looking outside of these traditional locations, especially if they can buy six apartments for the price of one and save thousands of pounds on stampduty.
We are seeing areas like Paddington and outer London suburbs now on their radar, where new build luxury homes flood the market. To the Middle East, this whole period of currency devaluation is a window of opportunity to put a portion of money back into London’s bricks and mortar.
The resurgence in foreign investment is much needed as the domestic market has lost momentum in recent months.
While increasing foreign investment may be an unintended consequence of Conservative party policy, it nonetheless enables us to call the bottom of the market for Prime Central London with a slow recovery now in motion.
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