Dubai-based real estate consultant Henry Faun is feeling optimistic as he contemplates the future of UK property.
Not only is he booking a flight from the UAE to the UK in the next few weeks for the first time in more than a year, he has three viewings lined up in London on one day.
“It’s a long time since I’ve been able to say that,” he says. “This week I also have two Saudi clients coming in for viewings with budgets north of £10 million.”
Mr Faun, of Knight Frank, lives in Dubai where he heads the consultancy’s Middle East private office.
Like many in the sector, he was buoyed by the news this month that the UAE had been added to the amber list, allowing residents from the Emirates to travel into the UK without facing an expensive stay in a quarantine hotel.
Arrivals from amber-list countries, which also include Bahrain and Qatar, now only need to self-isolate for 10 days, reduced to five days by providing a negative coronavirus test.
Mr Faun says the phones have been ringing constantly as clients, eager to buy, book in viewings, adding to the buyers from Saudi Arabia and Kuwait who were already able to tour properties in London.
“We’ve got interest for properties worth from £1m to £2m ($1.3m to $2.7m) up to £15m plus," says Mr Faun. "Lots of people we’ve been speaking to for a year or so are keen to travel and waiting for the right opportunity.”
Despite the pandemic hammering Britain’s wider economy, the country’s property market has undergone a mini-boom, with prices up 8.5 per cent last year on the back of rising demand and low supply as city dwellers sought homes with more space after months of lockdown.
Chancellor of the Exchequer Rishi Sunak’s stamp duty holiday boosted the market even more, as buyers looked to cash in on a tax break worth up to £500,000 on the first £500,000 of a purchase price.
But with many international buyers stopped from travelling into the UK amid the country’s tight travel restrictions, it left London’s luxury developers sitting on stock with interested buyers unable to fly in to view.
To get around this, developers created innovative solutions, with some building show homes in Dubai and others using software to create virtual viewings.
“The market has been suppressed by the lack of international travel for international buyers,” says Sean Ellis, chairman of developer St William and St James, part of the Berkeley Group, which has a number of new developments on offer in the new Nine Elms district of South London as well as in Fulham.
The company has hosted numerous online viewings, merging different types of content such as photography, film and computer-generated imagery to create a digital “journey” for their customers.
“We’ve had buyers that have bought and not seen the property, which is quite amazing. But often they will have friends or family in the UK and they’ll send them to look," Mr Ellis says.
However, those looking for a home or perhaps to purchase a university base for a younger family member want to view in person.
“We had a long list of people saying 'as soon as it opens up, we're coming', and we’ve seen people becoming impatient in recent weeks and start transitioning through,” Mr Ellis says.
Now market analysts are expecting a surge in transactions from Middle East buyers with one sign they are back, says Mr Ellis – the increase in the number of supercars outside the company’s marketing suites.
Simon Barry, head of new developments at Harrods Estates, the luxury real estate arm of the Harrods Group, has also noticed the return of the supercar, a tradition every summer when wealthy Gulf visitors fly in with their favourite luxury vehicles.
“We’ve seen, or rather heard, the first wave of UAE and Qatar-registered supercars appearing on the streets of Mayfair” Mr Barry says.
“Anecdotally speaking, it’s the more well-heeled Middle Easterns who’ve arrived first. This probably reflects the fact that those who already own property in London can come more easily at short notice, or those for whom money is no object can make last-minute changes to holiday plans as they chose.”
However, it is still “early days, Mr Barry says, with many clients still at the planning stages for a UK visit.
“Of course they now have to quarantine: we’re still waiting for face-to-face meetings but the diary is starting to fill up," he says.
International buyers now account for 75 per cent of sales and lettings at Harrods Estates but Mr Barry says London is still missing the bigger influx of visitors.
“We know many of our clients cancelled their UK travel plans back in June when the government opted to keep the UAE on the red list, and we believe many have now made other arrangements."
At the Prince of Wales Drive development in Battersea, the sales teams are already receiving a steady stream of buyers coming in for viewings, particularly from families looking to purchase larger units.
The development of 926 new homes by St William in the emerging Nine Elms district of South London, is a short walk from a new Northern Line tube station set for completion at the end of this year and sits next to Battersea Park.
With huge amounts of competition from other developers in the area, including the Battersea Power Station regeneration project, Prince of Wales Drive has tried to stand out with room sizes up to 15 per cent bigger than the regulatory minimum.
“We identified a gap in the market for larger family homes and we know that is particularly popular with Mena buyers,” Mr Ellis says.
The project, where prices start from £785,000 for a one-bedroom flat, also offers a range of lifestyle amenities from a private pool, spa, and gym to a games room, karaoke area, music room, library and private cinema room.
Meanwhile, a clubhouse space on the 24th floor of the development’s Park Central building, offers a space for socialising and relaxing with a bar and lounge, while a separate Atrium Suite caters to the new demand for home-working with hot-desk workspaces, a boardroom and a roof terrace with outdoor Wi-Fi.
“There's a huge amount of competition over there, 486 acres have been developed” Mr Ellis says, pointing towards the wider Nine Elms area.
This is why bigger flats and lifestyle amenities are needed to attract Middle East buyers looking for that hotel-type experience when they jet in to stay at their London homes, he said.
At the company’s King’s Road Park development in Fulham, where 1,843 homes will be built in total, the residents’ facilities are also designed to appeal to that market, with 23,000 square feet of amenities including a private courtyard garden with formal lawns, private members’ club, 25-metre swimming pool and spa facilities, a virtual games room, two cinema rooms and a private dining room.
With prices ranging from £725,000 to in excess of £2.5m, head of sales and marketing Charlie Fleming, says she has hosted four to six viewings a day of the development’s show home in recent weeks, with a huge increase in interest since the change in the travel restrictions.
However, many of the site’s visitors are walk-ins, she says, with those staying at the nearby Chelsea Harbour Hotel wandering into the development after spotting it from the King's Road.
“A lot of our Middle East customers walk in rather than booking appointments," she says. "So I expect to see a lot of people wandering in."
Up to 30 per cent of sales at the two developments, which are both regeneration projects of former gasworks, have gone to international buyers so far, Mr Ellis says.
Overseas buyers tend to snap up properties earlier in the development process to secure the best deals, while domestic buyers buy closer to completion when they can secure mortgage offers, he says.
Selling units to overseas buyers is “crucial”, Mr Ellis says, because early sales ensure new developments can actually be delivered.
To help attract international buyers, Berkeley has invested in a network of offices in key locations around the world, including Dubai, where agents help potential buyers choose the right type of unit and development for them, with some buying without visiting the UK.
“We sold a £6m apartment at The Dumont development and the customer didn't see it,” said Mr Ellis.
Relying on technology for sales is something the international sales arm of Barratt London, one of the UK's largest house builders, has certainly tapped into during the crisis.
The company set up an international sales team more than five years ago, with 14 per cent of its overseas buyers now coming from the Middle East – making it the company’s second-biggest market with a capital value of £50m to £60m a year.
While the pandemic has prevented the sales team from jetting into the region since January last year, with 43 overseas team trips cancelled last year alone, business increased in March when the stamp duty holiday was extended until the end of June.
“We started to see people taking investment opportunities without visiting the UK, particularly on the lower value product. There was a fear of missing out on good opportunities," said Stuart Leslie, international sales and marketing director at Barratt International.
About three years ago, Barratt London switched focus from central London developments to “bread and butter projects” from the capital's Zone 3 outward to deliver “affordable properties for people to live in” with prices for the smallest units starting at £300,000.
The company now has 13 projects around London not in the “traditional locations that international investors look at, particularly Middle East investors”.
“But since developing the agent network and doing the marketing, we found a shift in demand more towards high-yield products and lower property prices. So it's kind of worked in our favour,” Mr Leslie says.
“We've engaged more with directly with customers, but also with family offices looking for serviceable investment in London for yields above 4 per cent, which put our product at the forefront of the opportunity mix.”
The reliance on technology to sell also worked in the company’s favour, with the “Zoom bandwagon” securing more face time with Middle East clients.
“When we used to go out to the Middle East, they'd have a maximum of 30 minutes, perhaps 40 minutes, whereas now you actually get more screen time with the customer," Mr Leslie says.
While traditional Middle East buyers buy in the “standard golden postcodes” of Belgravia, Knightsbridge and Chelsea, the younger generation are “looking for better value”.
“So the family home would still be in prime central London, but the second generation prefer something a little bit further out,” Mr Leslie says.
Next month, the Barratt International team are heading back out to the Gulf to meet up with their clients in person.
“Traditionally they would come over to the UK to visit afterwards but it may be that we get out there and they'll say, 'well, we'll make an investment without visiting', Mr Leslie says.
“But people might also revert. The reason why they invest here is not just for investment. It’s more to do with spending time in London and all the cultural and art benefits that come with it.”
