Real estate prices in central London increased substantially in August as wealthy foreign investors looked for a safe haven due to fears that there may be another global recession. During the last 12 months through to August, the value of property costing an average of $6 million or £3.7 million, increased by 10.5%.
Prime London property is now regarded as being separate from the rest of the UK property market, and as being in an investment class of its own. Estate agents now estimate that prices in the capital have increased 36.3% since prices reached a low point in March 2009, and much of this increase is down to the weakness of the pound and low base rates. A recent report found that the number of new buyers increased by 11% last month compared to August 2010, and offers increased by 13%.
Those purchasers buying with sterling are now paying more than peak prices in 2008, but those paying with euros are still achieving a 10% discount on 2008 prices, while it even better for those paying with US dollars as prices are 18% less. It’s expected that London real estate will register a double-digit growth rate by the end of 2011, and the recent riots have done little to affect demand.
According to the article in Arabian Business, many of the buyers are Middle Eastern investors, as prime London property has long been seen as a safe haven. The average MENA investor spends around £4 million, and is estimated this group holds around 13% of the most expensive property in London.
Their willingness to spend on London property is illustrated by the recent news that Harrods Estates has just leased the most expensive property in London to a Middle Eastern businessman, at a cost of $90,000 a week.