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MENA’s love for London grows

JLL Launches new business line

MENA buyers 'get easier access to London's residential market'.

February 26, 2013 4:10 by

London’s prime residential market has long been quite irresistible to buyers in the Middle East and North Africa.

That spark may have fluctuated from time to time, but a report by CBRE indicated that buyers from the Middle East accounted for 16 percent of prime central London house sales in the fourth quarter of 2012. To put that hike into perspective, that number jumped from 3 percent in the first quarter of that same year.

“There has been a steady flow of capital into the Middle Eastern financial centres and we anticipate that a significant proportion will end up in London residential,”  said Mark Collins, CBRE’s head of residential.

In light of this spike in interest, Jones Lang LaSalle has recently launched a new business line called London Residential Sales. The department will be based in the Gulf and is meant to grant easier access for regional buyers to invest in residential properties across central London.

Wahi Mohsen, recently appointed Head of UK Residential Sales in MENA talks to Kipp about this new development.

Firstly, what is it about London’s residential market that Gulf buyers find so appealing?

There are a range of different factors that make London attractive to Gulf investors.  London combines the benefits of a political safe haven and a global financial centre.  This is reflected in the stable political and economic structure.  Other attractions for Arab investors include the pound’s relative weakness against the Euro, time zone/relative ease of travel to the GCC and tax efficiency

There are also financial benefits that are attractive to Arab investors; these include good rental yields, increasing property values and strong demand for prime locations.

In a nutshell, London is an open, accessible and well established international real estate investment market that is transparent and well regulated. As such, it has been a traditional investment base for Arabs for many years.

If JLL’s launched this new business line, clearly the demand must be growing – but at what rate?

There is no doubt that interest in the London residential market remains strong among Arab investors and they form an important source of demand for the 50 projects that JLL is currently marketing in Central London.  This has of course been the key driver in our decision to establish this new business line within our MENA business.

What is the percentage that Gulf Buyers account for in London’s housing sales?

Arab investors account for a total of 15% of the Central London residential market; the majority of these Arab investors are from the GCC.

Does tourism play a big role in long-term investments?

Absolutely, Middle Eastern and GCC citizens in particular are known for being passionate about London. Many Arabs already have second homes in London for personal use as well as properties held for investment purposes.  Due to close historic ties, many leading families from the GCC have been coming to London for generations, their children study in cities across the UK.

There were reports last year about friction between Gulf Buyers and tax evasion. Do you play an educational role here?

We are constantly updating our clients on any new changes and legal requirements. I believe those recent issues reflect a misunderstanding of the new taxation regulations.  There is now greater clarity and we can advise both new investors and those with existing structures about what action (if any) needs to be undertaken before the new rules take effect in April 2013.

Has a tax bill known as Mansion Tax affected Gulf Buyers?

At present this is just an idea and there are no firm proposals.  The present government is against the idea so it has not affected investment decisions at this stage.

Should London be making any exception for foreign buyers? Do you imagine that happening at all?

The government will hopefully make the right decisions that support rather than hinder the investment market. No government is going to introduce any new legislation without clear consultation so to speculate at this stage is premature.

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