Wealthy Arabs arriving early in London
It’s not usually until summer is in full swing that wealthy Arabs descend upon London, but this year, along with the unusually warm weather, the rich have come early. As the Arab spring sweeps across the region, Middle Easterners seeking refuge for their cash are snapping up million-pound properties in the British capital.
From early reports that Gamal Mubarak, a son of former Egyptian president Hosni Mubarak, was hiding out in his Knightsbridge townhouse during Tahrir Square protests, to squatters taking over Saif Al Qaddafi’s Hampstead mansion, London and its prime properties have figured in the Arab uprisings. But it is not just sons of autocrats who see London as a haven. Arabs with money to spare believe a London home–in prestigious neighborhoods in Knightsbridge, Mayfair or Belgravia—is the safest investment for their cash. And a recent report by upmarket estate agents Savills says prime London property is seen as a gold standard asset.
“In the same way gold is a hedge against inflation, a safe haven for wealth, central London property is seen in the same way,” said Yolande Barnes, Director of Research at Savills. “Somebody buying here can be sure their investment is safe.”
Another high-end property company, Knight Frank, noticed a surge in interest from the Middle East in the wake of political instability in the region.
“The turmoil in the Middle East and North Africa has had an impact in terms of driving demand into London,” Liam Bailey, head of research at Knight Frank told Al Arabiya. Mr. Bailey said the biggest impact thus far was Middle East buyers coming to the market earlier than usual this year, bringing forward the traditional Arab-buying season by almost two months.
Arabs and other foreign buyers make up about 75 percent of purchases in the premier segment of the market, which includes properties starting at least at £10 million (the equivalent of $16.5 million). And in the face of limited supply all this foreign demand is driving prices up in the capital.
The latest report from Rightmove, the UK’s biggest property Website, showed asking prices in London reached their highest ever in April and prices in central locations are up 8 percent so far this year. This is particularly striking given that prices elsewhere in the UK remain stagnant.
And as regional instability continues, London is seen as a no brainer for Arab investors: it combines the benefits of a political safe haven with a global financial center and favorable tax conditions. The pound’s relative weakness against the Euro, the pullback in house prices in 2010, and a desire to hedge against inflation, all add to the appeal.
Many buyers make their purchases sight unseen, agents said.
That was the case for Samuel Bikhit, a British-Egyptian agent who sold three properties the week after former Egyptian president Hosni Mubarak stepped down. Egyptian businessmen working in the industrial, textile and food industries bought properties for prices ranging from £3.5 million ($5.8 million) to £5 million ($8.28 million). Mr. Bikhit confirmed that at least one of the sales went through without a viewing.
“Nobody loses money in London,” he said, explaining how a one-bedroom apartment in the 1980s would have sold for about £75,000 ($124,300) but now averages around £400,000 ($662,993). “In 30, years we have seen prices go up by several multiples. This is a small example of how you can’t lose money, especially in central London. It is money well invested,” he said.
By chance, Mr. Bikhit happened to be in Cairo during Tahrir protests and was approached by many Egyptians. They were unsure how the political situation would pan out, and they were keen to put their money in London. He has clients from around the Middle East and is planning a trip to the region where he plans to market some his prime properties to wealthy Gulf nationals.
Another agent, Camilla Dell of Black Brick Property Solutions, said enquiries from the Middle East have doubled since the beginning of this year and that she is seeing interest from a wider range of countries.
“We have always had a strong client base from Egypt, the UAE, Saudi and Lebanon,” Ms. Dell said. “However, since the crises we have noticed an increased diversity and we now have clients from Iraq, Yemen, Jordan and Bahrain.” Black Brick is currently seeking properties worth a total of more than £20 million ($33.1 million) on behalf of Arab clients.
By Carina Kamel