They are moving their money away from the region and putting it in bricks and mortar in London as it is regarded as one of the safest places to invest and also move to.
Internet traffic from the Middle East to Knight Frank’s catalogue of homes in London’s priciest neighbourhoods, such as Mayfair and Knightsbridge, jumped 10% in the year to October. The firm estimates that Middle East buyers spent 50% more in October than the same month last year, paying an average of £3.5 million pounds for a property.
They are shielding their wealth from political turmoil back home, including the Syrian civil war, estate agents believe. ‘Things are precarious between Israel and its neighbours and the turmoil in Syria is frightening. People are wondering where will be next. They realise they had better find somewhere else to live,’ said Andrew Langton, chairman of high end estate agent Aylesford International.
London’s relatively stable political climate and transparent legal and financial systems have made it a target for many overseas investors looking to park their wealth. Prices for the best homes have risen 52% from a post credit crisis low in March 2009.
The city’s attraction among Middle Eastern buyers heightened after the Arab Spring uprisings last year, which toppled governments in Egypt, Tunisia and Libya, and it has lingered via the civil war in Syria.
Political stability has begun returning to some countries, such as Egypt since June’s election of Islamist president Mohamed Mursi. But the latest London home buying figures suggest outflows of money may be increasing from some other nations.
‘Events such as the Arab Spring and the Syrian conflict have created more instability and uncertainty and you see greater demand from people looking for safe haven assets,’ said Liam Bailey, Knight Frank’s head of residential research.
High profile buyers this year include Egyptian mobile network billionaire Naguib Sawiris, who is reported to have paid about £37 million for a flat in Knightsbridge.
As overseas buyers flee political strife at home and protect themselves from reprisals, safety measures such as panic rooms and gun safes have become more popular in new high end London homes.
Luxury development One Hyde Park has panic rooms and bulletproof windows. The project was financed by a joint venture that includes a company owned by the prime minister of Qatar.
In addition to homes, Middle Eastern sovereign wealth funds such as the Qatar Investment Authority have spent billions of pounds on offices and shops in London, including the development of Britain’s tallest skyscraper, the Shard.
Qatar was the top sovereign wealth buyer of European property in the 12 months to August, spending €3.5 billion on eight deals including the London Olympic athletes’ village and a mall on Paris’ Champs Elysees, data from research firm Real Capital Analytics showed.
