It would be foolish in the extreme, bordering on the theatrical, to write off London as the enduring mecca for international buyers seeking refuge from the ongoing turbulence in the Middle East.
Admittedly, the well-publicised fiscal manoeuvrings of Rachel Reeves, particularly the non-dom reforms, have encouraged a number of wealthy international investors to ‘pick up sticks’ and decamp to more accommodating tax jurisdictions.
One can scarcely criticise them for casting an appreciative glance toward sunnier, and indeed fiscally lighter, shores.
However, as is so often the case in property, the pendulum has an irritating habit of refusing to stay still. Our international trophy homes department has recently been rather busier than usual, fielding renewed enquiries from buyers once again looking to London as a sanctuary, particularly as tensions in the Middle East broaden and become rather less predictable.
GEOPOLITICAL INSTABILITY OF A MORE COMBUSTIBLE VARIETY
It underlines a simple, if slightly uncomfortable, truth: while many such clients may take a dim view of the current fiscal climate, they tend to find it preferable to the alternative, namely, geopolitical instability of a more combustible variety.
Until recently, one might have suggested that the principal drawback of Dubai or the wider UAE was the rather enthusiastic summer heat.
Now, even buyers from across the Gulf, including Saudi Arabia, are demonstrating renewed interest in London, seeking homes for their families while making prudent use of the 90-day rule, which offers a degree of fiscal discretion not entirely without its charms.
LONDON’S A FINANCIAL COLOSSUS
London’s role as a financial colossus, and as a magnet for trophy property acquisition, dates back to the 1970s, when the explosion of oil-derived wealth in the Middle East ushered in a procession of monarchs, potentates and assorted grandees, all quietly hoovering up landmark assets across the Capital.
The Bishops Avenue in Hampstead was an early beneficiary, notably with the purchase of Kenstead Hall in 1976 by King Khalid for the then eye-watering sum of £2.7 million, the highest price ever paid for a single residential property globally at the time.
This acquisition was followed by a succession of further purchases by members of the Saudi royal family, ultimately creating something approaching a contingency enclave, should regional tensions have escalated beyond Kuwait.
Similarly, when King Constantine of Greece found himself unexpectedly between thrones in the early 1970s, he and his entourage settled in Hampstead Garden Suburb.
Actually, he bought my partner’s (at the time) house (Bob Tanner), which was quite a luxurious property sitting in 3/4 of acre land overlooking the Hampstead heath extension but typically understated, as is the penchant for Greeks, and certainly not a super mansion that you’d find in Bishop Avenue.
It was, coincidentally, just a few yards from my own home and served as his London base for over three decades.
One recalls, with a certain fondness, Princess Diana arriving in her Audi convertible, ferrying a young William and Harry to children’s parties—an automotive choice, I might add, not entirely endorsed at the time by the then Prince Charles.
PATTERN REPEATS
The pattern repeated itself with admirable consistency. Following the fall of the Shah of Iran, both he and his brother acquired substantial homes in North London, including Hornbeams on Winnington Road, purchased through Glentree.
They were soon joined by a wave of Iranian entrepreneurs seeking the same reassuring combination of leafy tranquility and geopolitical distance.
Oddly enough, this same property was bought by Prince Jefri of Bruni from Glentree and believe it or not, it was turned into an international sized badminton court over three floors in height, as the interior was hollowed out for this purpose.
The 1980s brought Nigerian and Indian buyers, buoyed by oil wealth and commercial success, followed by Scandinavians and Americans taking advantage of a conveniently weak Pound. The 1990s ushered in Russian and Eastern European oligarchs in the wake of the Cold War’s conclusion, and more recently, Chinese buyers have sought similar refuge from the uncertainties of their domestic landscape.
In truth, for monarchs, dignitaries and the globally affluent alike, London has long served as the default second, or indeed third, home. And, as the saying goes, twas ever thus.
LESS ADVERSITY MORE OPPORTUNITY
Naturally, these buyers are not without financial acumen. Prime Central London property is currently available at something of a discount, values sitting up to 25% below their peak of two years ago, combined with a depreciation in Sterling of approximately 11% against the Dollar. By any sensible metric, this begins to look rather less like adversity and rather more like opportunity.
And let us not forget that London’s reputation as one of the world’s great cities has not been assembled by accident. Its institutions remain world-class, its centres of excellence globally respected, and its cultural and commercial appeal remarkably resilient.
AN AGREEABLE CONTRADICTION
Take Hampstead, for instance: a village in character, yet within a quarter of an hour of the West End—traffic permitting, of course, which is not always a given.
There, one may still acquire substantial estates, occasionally extending to eleven acres, complete with every conceivable modern luxury, all set against a backdrop of open green spaces, golf courses and some of the Capital’s most sought-after schools. It is, in essence, a rather agreeable contradiction.
Despite the periodic chorus of pessimism, London remains a tolerant, sophisticated and, by international standards, comparatively safe environment in which to raise a family. Its offerings, whether culinary, sartorial, or cultural, are second to none. An Aladdin’s cave, if you will, though one suspects the genie has long since unpacked and settled in permanently.
Importantly, many of these buyers are not unduly troubled by the recent hikes of inflation or elevated interest rates, concerns that tend to weigh more heavily on the domestic market. They view current conditions as cyclical and, crucially, temporary. The cheap value of Sterling against the basket of international currencies is far more valuable to them.
ECONOMIC REVIVAL NOT BEYOND REACH
Indeed, there is a growing sense that, with time, and perhaps a shift in the political weather, an economic revival may not be entirely beyond reach.
As the old adage has it, ‘when the cows sit down, rain is seldom far behind’. By the same token, when values fall, as they have done, the more astute investor does not reach for an umbrella – but rather for a chequebook.
