Boom for prime homes in London driven by Middle East buyers
The cost of London's most expensive properties rose the most in nine months as Middle East investors helped to push up prices.
Homes costing an average of £3.7 million (Dh22.1m) rose 10.5 per cent in the past 12 months, according to a report released yesterday by Knight Frank.
The boom is being fuelled by foreign buyers, who are taking advantage of the weak pound to snap up property in prime areas of London.
"Overseas buyers have been crucial in the market, even at today's price," said Grainne Gilmore, the head of UK residential research at Knight Frank. "If we have got a denomination that's linked to the dollar, you're still looking at 20 per cent discount compared to 2008."
Another factor driving up prices is the small supply chain, said Jonathan Hewlett, of Savills, the upmarket property agent.
"With international purchasers, what we are finding is that only about a third of them will resell."
Mr Hewlett said Middle East buyers were still key players in London's prime property market, but Russians and the former Soviet states were "probably" the biggest.
Buyers from the Middle East and North Africa (Mena) were particularly important to the prime central London market during the downturn in 2008 and 2009, according to a report released last month by Savills.
They bought 13 per cent of the properties during that time, but retreated as prices began rising, forming just 7 per cent of the market last year.
However, the Arab Spring spurred a second influx. Investors from the Mena region now make up 9 per cent of the market, and there are reports of "much greater numbers searching for property", Savills said.
Chinese investors bought just under 2 per cent of prime property by value last year, but 13 per cent of all used property by value in the Docklands area.
Buyers from India and Pakistan constitute 9 per cent of the top end of the property market, with Russia and the former Soviet republics accounting for 13 per cent.