Middle East buyers to cash in on prime London property market

Cash is king when it comes to the prime central London property market and Middle East buyers are perfectly positioned to take advantage of this.

Vic Chhabria, managing director of London Real Estate Office, whose client base largely comprises overseas buyers from Mena and more specifically the GCC, said the potential for further interest rate rises in the UK, will cool demand from domestic buyers in the capital’s real estate.

This is despite the changes in stamp duty, essentially doubling the threshold from £125,000 to £250,000, with first-time buyers paying no stamp duty on the first £425,000 of a new home, up from £300,000.

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In an exclusive interview with AGBI, Chhabria said the economic uncertainty, and the low value of the pound, will entice more Middle East buyers to London. 

“Buyers that are doing so with no leverage are in a strong position and most sellers will pay attention to offers from cash buyers,” he said.

“Buyers could also take advantage of their position and negotiate a slightly better price of their acquisition based on their ability to transact swiftly. Buyers from the Mena region will be in a position to capitalise on this as generally, they look to achieve no debt and buy outright.”

Chhabria added that while a limited number of new developments are stoking overseas interest, there remains a level of prestige attached to owning one of London’s Regency, Victorian or Edwardian mansion properties.

Data from property agents Chestertons revealed that a drop in the value of the pound is driving interest from Middle Eastern investors pegged to the US dollar, with a 10 percent increase in enquiries for London real estate.   

Savings are being achieved on properties which, six months ago, were on the market for £4 million and would have cost around $5.23 million. At current exchange rates, the same property now costs around $4.32 million – a saving of almost £1 million.

Statistics from Chestertons Mena also show that the top source markets are the UAE, Saudi Arabia, Kuwait, Bahrain and Egypt.

A further uplift of above 10 percent in enquiries is expected in the coming months as the London real estate market continues to be buoyed by both the favourable exchange rates and the recent announcement of stamp duty relief.

In total there were 461 super-prime (£5 million-plus) transactions between Q1 and Q3 2022 – which is higher than the total number of sales seen in any full year between 2015 and 2020.

Read Vic Chhabria’s column