ME buyers step up UK property purchases

Agencies London Buyers from the Middle East are playing a more active role in the UK property market, snapping up 16 percent of all real estate by volume...

Agencies London Buyers from the Middle East are playing a more active role in the UK property market, snapping up 16 percent of all real estate by volume sold to overseas buyers in the first three months of this year, according to a report by property consultancy Knight Frank.According to the latest data compiled by Knight Frank, investors from the Middle East are beginning to return to the UK’s property market as 16 percent of all sales to overseas buyers in the first three months of 2021 were to Middle Eastern buyers, up from less than 10 percent in the second and third quarters of last year. This is the highest proportion of Middle Eastern interest since the outbreak of COVID-19 in the UK. And whilst Middle Eastern investment is still some way off pre-COVID levels, activity is expected to tick up further as international travel restrictions ease.The last time prices increased on an annual basis was in May 2016, the month before the EU referendum and with subsequent political uncertainty, combined with a growing number of taxes on high-value property, meant average prices fell 17 percent in the intervening period.A period of house price inflation has therefore been overdue and was on the horizon when the pandemic struck, the report said.In a similar way to the wider UK property market, activity in PCL has been boosted in recent months by the lifting of lockdown measures and the successful vaccination programme, although prices have not increased to the same extent.“The relaxing of international travel rules will, however, provide a more noticeable boost in locations such as Mayfair and Knightsbridge. Low numbers of overseas buyers have come to the UK in recent months but the end of quarantine rules will certainly lift demand and although travellers may still need to quarantine when they return to their home country, it means shorter trips to London will become more tenable for overseas investors,” it said.“The relaxation of international travel rules will provide a boost for the Prime Central London property market but prices are on the up anyway,” Knight Frank Private Office Middle East Partner Henry Faun said. “Things are picking up where they left off after the general election in December 2019 and Middle Eastern buyers can recognise good value after five or six years of falling prices,” Faun said.“International demand for London property has been building over the last 12 months despite global travel restrictions. It has led to frustration on the part of some prospective buyers, particularly against the backdrop of the UK’s successful vaccination programme. Once travel rules are relaxed, we expect normal service to resume, including London’s long-standing relationship with buyers from the Middle East,” Faun said.The other impact of prices rising will be a further erosion of the discount for buyers denominated in overseas currencies. The effect will be exaggerated as the pound gets stronger, which in part has been driven by the country’s vaccine-fuelled economic recovery.The combined price and currency discount in PCL compared to the period before the EU referendum for buyer denominated in US dollars was 19.2 percent at the end of May, compared to 24.3 percent in December last year.Meanwhile, annual price growth in prime outer London increased to 3.1 percent in May, which was also the strongest rate of growth since before the EU referendum in March 2016.“Growing demand for space and greenery after three national lockdowns has led to an annual price growth in excess of 6 percent in markets like Richmond, Dulwich, Wandsworth and Belsize Park. Wimbledon experienced a price growth of 9.4 percent in the year to May, which was the strongest of all London markets,” the report said.Prime property market in central London is showing signs of revival after a five-year slump: Knight Frank