Middle East investors flock to London property market

Last year the firm sold $2bn worth of new-build residential property in London to foreign invstors, of which Middle East buyers accounted for about 9%, up from 5% in 2010.

The Middle East now accounts for the second largest group of foreign investors in the London residential market after Asia Pacific nationals who accounted for 15% of overall sales.

Central London's residential market continued to recover strongly throughout 2011 despite the on-going global financial crisis and continued concerns over the Euro, JLL noted. Prices in prime locations throughout the UK capital have risen 10% over the past two years, and are set to increase 4% this year, 5% in 2013 and peak at 8% in 2014, JLL predicted.

Rents are also expected to increase 7% this year and 8% in 2013, the report added.

Most Middle Eastern investors are looking for large family homes with 3 to 4 bedrooms, ranging in value from $3 to $24, the report noted. Key areas of interest remain Lancaster Gate, Marble Arch, Knightsbridge, Belgravia, Mayfair, Kensington, Regent's Park and St John's Wood.

However, a growing number of investors from the region are looking for value with investment opportunities in properties outside these traditional areas such as those in Marylebone and Fitzrovia.

"Middle Eastern investors have strong historic links to the London property market and have typically invested for the longer term," said Ben Stroud, associate director of residential agency, development & investment at Jones Lang LaSalle London. "London's reputation as a safe haven for investors is being reinforced by global troubles not undermined. Additional incentives such as a weak Sterling and a favourable tax system are also making it more attractive amongst a range of potential foreign investors."

Middle East investors have also been increasingly active in the UK capital's commercial real estate market in recent months.

Qatar's sovereign wealth fund said today it had completed the acquisition of Credit Suisse's headquarters in London and leased it back to the bank until 2034. The Daily Telegraph reported last month that the sale-and- leaseback deal was valued at about 330 million pounds ($523m).

In July, Qatari Diar Real Estate Investment Co. bought most of Royal Dutch Shell Plc's headquarters campus in London with Canary Wharf Group.

Qatar has other high-profile investments in London, including the Chelsea Barracks high-end residential project, Harrods department store and the US embassy building in Mayfair.