Luxury properties are particularly appealing as they aren’t following the same trend as the general property market. House prices across the UK generally surged through the pandemic. They also increased by 15.5% in the 12 months leading to July 2022, according to the Office of National Statistics, as the market was driven by domestic buyers.

But high-end properties in prime Central London locations, such as Chelsea, Mayfair, Notting Hill, and Westminster, dropped by 16% from the peak period of August 2015, according to Bank of England figures. While Capital Economics and HSBC analysts have projected house prices could fall by 12-14% over the next two years as the pound continues to slide. Furthermore, the value of the British Sterling decreased by up to 20% against other global currencies due to Brexit. This offers foreign nationals and overseas buyers a significant opportunity to buy properties at lower costs and receive great returns.

Factors that make London particularly appealing to Middle Eastern investors include:

Favourable financial opportunity: Luxury properties are increasingly appealing given the dollar’s strength against the pound, which unlocks greater value for Arab investors. Many have the United Arab Emirates Doham pegged or locked to the dollar as it gives them a more stable exchange rate and ensures their savings are in the currency. For example, Kuwait has the world’s highest currency, making the poorly performing pound particularly appealing.

Appealing high-end locations: Kensington, in particular, has been a popular location with Middle Eastern buyers for many years. For example, the iconic department store Harrods is currently owned by Qatar Holdings, the wealth fund of the State of Qatar, and the deal was finalised by Qatari Prime Minister Hamad bin Jassim bin Jaber Al Thani. But it was previously owned by Mohamed Al-Fayed, who also owned Fulham Football Club, which is very close to Chelsea.

Arab investors and business people visiting London traditionally stayed in high-end hotels like The Dorchester or The Ritz. But as the property market has evolved, it’s become more financially sustainable for them to purchase their own homes in these high-end locations.

British school system: Another critical consideration is the British education system, as ultra-high-net-worth individuals look to give their children the best possible start in life. Many Bahraini, Kuwaiti and Saudi individuals send their children to study in the UK at institutions like Oxford University and Cambridge University and want homes for them to live in.

Islamic or Sharia financing: The availability of Islamic financing or Sharia-friendly mortgages is also crucial to many Arab investors. Under Sharia law, interest cannot be charged or paid on loans or mortgages. So a Sharia-compliant mortgage is designed to prevent buyers from paying interest on a property. Rather than paying interest rates, Islamic banks will deal with “expected profit rates.” And many UK-based and international banks and lenders are Sharia-compliant, not just specifically Islamic banks, making the market even more appealing to Middle Eastern investors.