The Arab spring has turned into a ka-ching [£££] for London’s new-build residential property market, according to real estate consultants Jones Lang LaSalle.
The value of Middle East investment in London’s new-build market almost doubled last year as unrest in the region prompted buyers to look for havens abroad, the property consultants say.
In 2011 Middle East money made up 9 per cent of total foreign investment in London’s new-build property, compared to 5 per cent in 2010, according to JLL’s sales data. That happened as the total foreign transaction values for newly built homes stayed flat at around £1.25bn.
“It’s definitely a trend we’re seeing,” says Ben Stroud, associate director at JLL in London. “Whilst it’s always been a popular destination, since the beginning of the Arab spring we’ve seen a lot of money coming in.”
Middle East buyers have now overtaken Europeans as the second largest investor base for newly built London homes, according to Stroud. Asian buyers still top the list.
Most Middle East buyers are from the Gulf states, where Bahrain continues to witness violent unrest and Oman has seen protests.
London has long held a place in the hearts of home buyers from the oil-rich Gulf. One attraction is the cool summers in the UK capital as the temperature reaches boiling point in countries such as the United Arab Emirates and Saudi Arabia.
Others buy for investment reasons or to capitalise on health and education services in the UK.
In a world wealth report issued last summer, CapGemini and Merrill Lynch wealth management estimated that the wealth of the Middle East’s high net worth individuals totalled $1.7tr in 2010.
JLL’s biggest new build transaction of last year to the Middle East was six London apartments sold to one family for £22m.
With oil prices sitting comfortably above $100 a barrel, the Gulf governments are pumping funds back into their economies to improve job opportunities and living conditions for their citizens.
Meanwhile those citizens are cashing in abroad. The typical investor from the region is looking for large family homes, with three to four bedrooms priced from £1.5m to £15m, according to JLL.
The hotspots, as ever, are Lancaster Gate, Marble Arch, Knightsbridge, Belgravia, Mayfair, Kensington, Regent’s Park and St John’s Wood – most of which border Hyde Park and show up as the green and purple slots on a Monopoly board.
For Middle East buyers in search of adventure, some are looking to chichi Marylebone and Fitzrovia for bargains.