Middle East buyers’ share of UK property demand grows

• Middle East buyers 14% of total
• European interest falling
• London among most expensive cities

Prospective buyers from the Arabian Gulf and the wider Middle East are taking up a larger share of total international interest in UK real estate, the property broker Hamptons has found. 

However, total overseas demand for property in the British Isles appears to be falling, Hamptons said.

International applicants as a share of the total number of people registering with more than 600 UK estate agents to buy a home in the UK fell to 1 percent in the first quarter, Hamptons’ figures show.

This is the lowest share since Hamptons’ records began in 2008 and down from a peak of 2.9 percent in 2009.

“Stamp duty increases, particularly for those purchasing second homes, combined with Brexit and amendments to the tax treatment of non-doms, have added to costs and reduced the lure of property in the UK,” said Aneisha Beveridge, head of research at Hamptons. 

However, Middle Easterners’ share of this international group has risen gradually since 2008 to reach 14 percent in the first quarter, making them the third-largest group after Europeans and North Americans.

Their share is up from 8 percent in 2008, behind only buyers from the United States in terms of growth. US buyers’ share of interest in UK property rose 10 percentage points.

By contrast, Europeans’ share has fallen to 43 percent of the total international group, from 48 percent in 2008. 

The decline in international interest as a share of total interest has largely been driven by fewer Europeans relocating to the UK, after a raft of discouraging tax and other changes introduced by the UK government recently, Hamptons said. 

Britons voted in 2016 to leave the European Union.

The UK government has increased stamp duty land tax for overseas buyers and owners of second homes, and abolished the preferential tax status awarded to wealthier foreigners living in the UK, known as non-domiciled residents, or non-doms.

“The case for buying a home, particularly in prime central London, has become increasingly tenuous for some international buyers,” Beveridge said. 

That said, wealthy Middle Eastern nationals buy primarily to be closer to favoured schools and universities that they or their children attend, and tend to be less price-sensitive than those from other parts of the world, according to Beveridge.

The UK’s ties with the Middle East have strengthened a lot over the past decade, and the UK is increasingly seen as a safe option for buyers from the region, who value its robust legal system and enjoy the culture, especially in central London, she said. 

• UAE dominates UK overseas mortgage market
• Oman mortgages surged last year on falling property prices
• Dubai villa sales double in February

London ranked fourth, after Monaco, New York City and Hong Kong, in the advisory company Henley & Partners’ list of the world’s most expensive cities, published this week. 

Middle Eastern buyers also appear to be increasingly interested in relocating to the UK as opposed to purchasing second homes, according to the research. 

In the first quarter, 81 percent of applicants from the Middle East were looking for a permanent new home, the highest share on record, and up 11 percent compared to a decade ago.