Mideast buyers ‘seek value’ as London’s super-prime property market slows

Growing number of Arab investors at top end of market look beyond so-called ‘golden postcodes’

PHOTO: Property price growth at the £10 million-plus level has underperformed the prime central London average, Knight Frank said. Credit: Shutterstock

Middle Eastern property investors are looking for value beyond London’s most established luxury areas, a Knight Frank report suggests, following an overall dip in activity at the very top end of the market.

Transaction volumes in the UK capital’s super-prime market shrank by a fifth in the second quarter, the property firm said. This was partly due to political uncertainty and the new ‘stamp duty’ tax rates.

Price growth at the £10 million-plus level has underperformed the prime central London average, growing 4% in the two years to June versus 10.3% in the wider luxury market, Knight Frank said.

Middle Eastern investors are still accounting for a growing share of the top end of London market – but are looking beyond the traditional luxury hotspots.

“Buyers have become less focused about the pricy locations of super prime properties or the so-called ‘golden postcodes’ and started to look further afield for value in a high-quality super-prime London pipeline. The map of the £10 million-plus sales in London in the year to 30 June 2015 is wider than three years ago and now encompasses areas like the Southbank,” said Victoria Garrett, Head of London New Homes Middle East at Knight Frank.

“From the Middle East on the ground we have seen the super-prime property market investment into London experiencing a number of interesting trends. New home buyers are seen increasingly driven by the property quality and its level of amenities such as a 24-hour concierge service, secure parking and leisure facilities.”

Middle Eastern buyers are accounting for more transactions at the upper end of the market, Knight Frank said. The percentage of Middle Eastern buyers of homes valued at more than £10 million rose from 11% to 16% of the overall market in the year to June 30th, while the number of Russian buyers decreased due to the decline of the rouble, the report noted.

Another trend in London’s super-prime property market is the younger age of buyers. Figures indicate that nearly 18% of buyers were under 40 in the year to June 30th, compared to 10.7% in the preceding 12-month period. The percentage of super-prime buyers in their 30s more than doubled to 14.8% from 7.1% over the same period.

“We’re seeing more young buyers from the Middle East who have made their money in hospitality, [the] property market or oil industry, in addition we find that decisions by purchasers in the Middle East are increasingly being entrusted to the younger generations of families who are often those occupying the property and who have already spent time living and studying in London,” said Garrett.

The election of a majority Conservative government in the May election caused some sellers to expect a short-term spike in luxury property prices of as high as 10% – something that failed to materialise, Knight Frank said.


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