Wealthy Arab investors are expected to make a strong comeback to London’s luxury real estate market in 2013 as confusion over tax changes announced in budget subsides.
In 2012, London home prices significantly slowed down even though there was strong global demand for prime property in the city. Prime London properties grew on an average only by 5.3 percent this year. In 2011, these prices had increased by an estimated 14.2 percent.
Since 2009, the housing market has been experiencing a robust increase in prices. Compared to the post-credit crisis in 2009, properties in central London are valued almost 23.9 percent higher. The prices of homes worth over £ 5 million are also higher by about 32 percent.
According to the consultancy firm Savills, London luxury real estate market has been able to attract overseas capital from buyers seeking high value trophy homes. “After a period of uncertainty post Budget, we expect overseas buyers – such as Middle eastern and CIS nationals – to build the extra cost of ownership in London into their calculations, now that the tax changes for properties over £2m have been crystallized in the finance bill”, adds Savills.
Traditionally, Arab investors have fancied properties only in Knightsbridge, Chelsea, Mayfair and Belgravia. Knightsbridge rose 8.6 percent in 2012 to end the year 41.1 percent above peak. These central areas have continued to attract wealthy Arabs and the demand for prime properties remains in strong demand. The demand has been fuelled by political turmoil in Arab countries during the last quarter of 2012. London offers these investors a relatively stable political system and transparent legal and financial systems.
In October 21012, luxury property hunters from Egypt, UAE, Israel and Jordan spent 50 percent more on London property compared to the previous year. These buyers dished out on average about 3.5 million pounds on each London property.