Why is now a good time to invest in luxury London real estate?

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There is certainly an increasing demand from clients in the GCC for UK property, as signified by a 31% increase in enquiries in the last six months, and there are several reasons for this.

The value of London property has traditionally doubled every 10 years, but whilst there has been a 45% increase in the price of property over the past five years, the increase in the past decade is only 15%. Furthermore, due to a small decrease in the value of London property, the ‘Bubble Index’ for London has reduced to a lower risk.

From an expat or foreign national perspective, London still represents a good value investment;

  • The Pound remains cheap against the Dollar, Euro and most other major currencies;
  • Prime property prices in London are stagnant or slightly down on last year;
  • Mortgage rates remain low; and
  • Banks have a high appetite for lending with a significant amount of liquidity to lend

These factors contribute to making London an attractive place to put money. Furthermore, with Brexit looming and general global uncertainty, many expats are looking to make sure they have a long-term exit strategy and security, which often includes having somewhere to move back to.

In my opinion investors in London property must take a longer-term view rather than looking to purchase property in the short-term with the aim of ‘flipping’ it for profit.

The notion of a bubble suggests a sharp and sudden contraction, which usually occurs where people have been investing with a short term and speculative mindset. Although changes to stamp duty, taxation and the uncertainty around Brexit means the market has cooled, there is no sign that people’s desire to live or invest in the UK has abated. This is especially true for Middle Eastern clients, who are not drawn to the UK by the lure of a quick buck, but rather for wider reaching reasons such as business development, or educational opportunities for their children.

From a UAE perspective, the trend still leads to investing in property in the UK. The market here is saturated with ‘unrewarding’ financial advisors and hence many people will still choose to invest in bricks and mortar. Also, in times of uncertainty, traditional investments become more popular, such as gold and property.

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