Reuters/London

A 45-bedroom mansion that had belonged to former Lebanese prime minister Rafik al-Hariri until his assassination in 2005, and is now on sale for a price tag of between £200mn and £300mn, is seen in the upscale Knightsbridge neighbourhood of London on Monday. Buyers from countries including Egypt, the UAE, Israel and Jordan spent 50% more on London property in October than they did in the same month last year, paying an average £3.5mn ($5.6mn), property consultant Knight Frank estimated
Middle Eastern buyers piled into London’s luxury home market in October amid political turmoil in the region, including the Syrian civil war.
The trend is not new, but a sharp increase in buying last month suggests wealthy citizens in some Middle Eastern countries believe their security is continuing to deteriorate, even as politics become more stable elsewhere in the region.
Buyers from countries including Egypt, the UAE, Israel and Jordan spent 50% more on London property in October than they did in the same month last year, paying an average £3.5mn ($5.6mn), property consultant Knight Frank estimated.
Internet traffic from the Middle East to Knight Frank’s catalogue of homes in London’s priciest neighbourhoods, such as Mayfair and Knightsbridge, jumped 10% in the year to October.
“Things are precarious between Israel and its neighbours and the turmoil in Syria is frightening,” said Andrew Langton, chairman of high-end estate agent Aylesford International.
London’s relatively stable political climate and transparent legal and financial systems have made it a target for many overseas investors looking to park their wealth. Prices for the best homes have risen 52% from a post-credit crisis low in March 2009.
The city’s attraction among Middle Eastern buyers heightened after the Arab Spring uprisings last year, which toppled governments in Egypt, Tunisia and Libya, and it has lingered via the civil war in Syria.
Political stability has begun returning to some countries, such as Egypt since June’s election of Islamist president Mohamed Mursi. But the latest London home buying figures suggest outflows of money may be increasing from some other nations.
A collapse of Iran’s rial currency in late September and early October, triggered by Western economic sanctions against Tehran over its disputed nuclear programme, may have accelerated capital flight from that country.
“Events such as the Arab Spring and the Syrian conflict have created more instability and uncertainty and you see greater demand from people looking for safe haven assets,” said Liam Bailey, Knight Frank’s head of residential research.
High-profile buyers this year include Egyptian mobile network billionaire Naguib Sawiris, according to two people with knowledge of the transaction; he paid about £37mn for a flat in Knightsbridge, British media reported.
One of London’s most expensive homes currently on the market is a 45-bedroom mansion that belonged to former Lebanese Prime Minister Rafik al-Hariri until his assassination in 2005. It is on sale for a price tag of between £200mn and £300mn, property agents said.
In addition to homes, Middle Eastern sovereign wealth funds such as the Qatar Investment Authority have spent billions of pounds on offices and shops in London, including the development of Britain’s tallest skyscraper, the Shard.
Qatar was the top sovereign wealth buyer of European property in the 12 months to August, spending £3.5bn ($4.6bn) on eight deals including the London Olympic athletes’ village and a mall on Paris’ Champs Elysees, data from research firm Real Capital Analytics showed.
Some market participants, such as Development Securities, have warned that overseas demand for London’s luxury homes could be hit hard when demand for the city’s safe haven role eventually eases.
A May report by the property developer warned that London luxury home prices could halve if the eurozone broke up, since the appeal of sterling might disappear as weaker European currencies created bargains elsewhere.
The appeal of London property to the global super-rich is also at risk as the British government considers increasing taxes on owners of the most expensive property, tapping into a public mood of resentment toward the wealthy.
But Bailey said Middle Eastern investors had become a fixture in the London market.
“For the last two years people have asked, when would this end, and it hasn’t done - it’s actually been pretty strong. So it’s difficult to see when it would end.”