UAE-based investors save millions as demand for London property surges
A new report reveals that currency shifts are driving a fresh wave of property buyers based in the Middle East who are targeting London real estate.
Post-Brexit, changes in the dollar-sterling exchange rate generated significant price savings and investment opportunities for US dollar-pegged investors in London. In 2015, the average price of an ultra prime residential property in Mayfair, for instance, was US$5,306 per square foot, this has now dropped by 10.6 per cent to $4,741 per sqft currently, according to the annual Ultra Prime Barometer report by Beauchamp Estates, Leslie J Garfield and IItam Real Estate, together with Dataloft, a marketing intelligence group.
A US dollar buyer purchasing a typical 3,900 sqft ultra prime apartment in Mayfair now pays $18.49 million, compared with $20.69m in 2015 – a saving of $2.2m, says the report. In contrast, for a multi-millionaire buying a Mayfair home in sterling, equivalent costs have risen 3.6 per cent from Â£3,719 (Dh16,948) per sq ft in 2015 to Â£3,853 per sq ft currently. Thus the same Mayfair apartment costs the sterling investor some Â£15.02m, up from Â£14.5m in 2015 – an extra Â£522,600.
Along with most countries in the Middle East being dollar pegged, including the UAE, Saudi Arabia, Jordan, Oman, Qatar, Lebanon and Bahrain, there is also the wealthy UAE-based Indian-diaspora business community whose wealth is US dollar based.
“The 10.6 per cent drop in London real estate prices for dollar buyers therefore had considerable influence over the past six months on the pattern of enquiries and sales of ultra prime Â£5m-plus residential property sector in the UK capital,” the report says.
“While enquiries and sales in prime central London from UK domestic buyers has remained relatively stagnant, over the past six months enquiries from Middle East and Asian investors have risen 15 per cent and purchases in prime central London are up 10 per cent; while enquiries and sales from UAE-based Indian buyers is up 10 per cent and 5 per cent, respectively.”
Middle East purchasers typically spend anything between Â£5m to Â£60m buying lateral apartments or houses in Mayfair, Knightsbridge or Belgravia, the report says.
Middle East-based expat Indian buyers tend to invest between Â£2m to Â£20m, with the majority choosing to buy London pied-Ã -terre homes in Mayfair or Belgravia, with Grosvenor Square and Eaton Square being the favoured addresses, respectively. Ninety-five per cent of dollar pegged Asian investors, such as those in Hong Kong and Macau, buy for investment, spending Â£500,000 to Â£1.5m in new build projects along the River Thames or around Canary Wharf, the other 5 per cent typically invest Â£5m to Â£25m buying homes for end use in Mayfair or Belgravia, the report adds.
Meanwhile, cash-strapped Londoners looking to invest in property might find the UAE is a more enticing proposition. Harrods, the famous department store in London’s upmarket Knightsbridge, is offering apartments in the new Downtown Views development, by Emaar Properties, directly linked to The Dubai Mall, the world’s largest retail centre.
The Downtown Views initiative part of the recently launched Emaar Properties 2017 showcase in Harrods on the 2nd floor of the department store, which is open daily until August 31.
The latest showcase, following a similar opening last year, features homes at the development just off Sheikh Zayed Road. Downtown Views is a new 55 storey residential apartment tower with more than 400 luxury one, two and three bedroom apartments, located in the upcoming extension of The Dubai Mall. Apartment residents will have direct access to the mall via a 500 metre overhead bridge which will connect the leisure podium at the base of the apartment tower with the shopping mall.
Apartments at Downtown Views are priced from Â£270,600.
Follow The National’s Business section on Twitter