By Will McKintosh

 

 

Buyers from the Middle East represent a larger portion of all residential real estate sold in London every year. When buying a property in London, it is important to consider a few keys points, such as location, purpose and building type.

Location: Central London or beyond

London is a very popular destination for business, tourism, fashion, shopping, theatre and arts and its rich history. While GCC (Gulf Cooperation Council) buyers of London property have historically favoured the more central London postcodes such as Belgravia, Mayfair, Kensington, Chelsea, Marble Arch and Marylebone, many buyers are now choosing to buy in other postcodes further out of town. These locations offer more space, which is a benefit for those with larger or extended families travelling together.

One area that has been particularly popular over the last few years in Nine Elms on the South Bank which is near to where the new US Embassy is relocating and which is becoming an ultra-modern residential and business distinct. Other locations of interest are properties close to certain colleges or universities, those that are near convenient existing transport links like the Heathrow or Gatwick Express and those near new transport links like the new ‘London Crossrail’ link.

Purpose: Investment or personal use

Many investors from the GCC have a longer-term investment view than regardless of whether the residence is being purchased for investment or personal use.

Investment in to ‘bricks and mortar’ may be a high priority to a GCC investor and these assets often create the foundation of any investment portfolio. Many of our buyers have portfolios of properties in London, and continue to buy and add to these portfolios over a period of years. Given that most GCC currencies are pegged to the US dollar, London as an investment also creates further diversity by holding a sterling-based asset.

Although all investors want a return, many buyers from the GCC are more focused on long-term capital appreciation than an actual rental yield. If you plan to use the property occasionally for holiday purposes, it will likely be left vacant for the remainder of the year. Other buyers in this region purchase properties for children who will be attending college or university in the UK. These factors may dictate both the location and type of building in your purchasing decisions.

Building type: New build or secondary market

Regional buyers tend to favour new build properties, as they offer certain benefits that one doesn’t get in the secondary market of older properties. These include simpler financial options and more amenities.

With respect to the financial options, leases are more common in London than freehold, particularly when buying apartments. Many buyers from the GCC are unfamiliar with leases in which you buy the right to live within a building but do not own the land or surrounding property on which it stands. While these leases may be short or long term and be applicable for new or aged properties, the leases for new properties tend to have longer lease periods (typically ranging from 125 to 999 years). For aged properties, the leases could have a much shorter time period remaining for the lease (only a few years in some cases) and these can be costly to extend. Because of these regions, many overseas buyers are more comfortable with new residences.

New buildings with more amenities offer both practical and luxurious benefits. Pools and health clubs may be very attractive lifestyle choices. Many old properties do not have a cooling system like A/C, and there will be restrictions for ‘listed’ properties against modernisation that may prevent installing one at all. Underground parking and concierge service offer both comfort and security with 24-hour protection as well as someone to organise anything from your dry cleaning to booking theatre tickets.

While various factors must be considered as discussed, there is no one-size-fits-all approach. Working with an experienced real estate agent can help you quickly sort through your priorities and available properties which fit both your needs and desires.

 

Will McKintosh is director, head of residential, JLL MENA. The views expressed are his own.