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London luxury property is still glitzy for Middle East investors
"They love London," said Niccolo Barattieri di San Pietro, CEO of luxury property developer Northacre, which is owned by the Abu Dhabi Financial Group. "They want to send their kids there, they speak the language, they understand the legal system."
Northacre started selling units at The Broadway in London last week. The development consists of 285 apartments on the site of the former police headquarters at New Scotland Yard in Westminster. The apartments start at £2 million ($2.6 million).
Barattieri estimates that 80% of luxury London homes are bought by foreign investors, and the fall in the pound since the U.K. voted to leave the European Union has helped.
"Especially right now, where the foreign buyer has an incredible advantage over a U.K. buyer," Barattieri told CNNMoney.
"We are seeing an influx of dollar-denominated buyers because they see one of those opportunities that comes to London every decade," he added, referring to the market slump that followed the global financial crisis in 2008.
The pound has fallen 12% against the U.S. dollar since June last year due to concerns about the impact of Brexit on the U.K. economy.
JLL, a real estate and investment firm, says its Gulf clients spent about $600 million on London property in 2016. It expects that number to rise this year as buyers return after pausing in the immediate aftermath of the Brexit vote.
"There were a lot of people sitting on their hands saying 'well what does this mean?' " said Will McKintosh, who advises JLL clients in the Middle East on London residential purchases.
"What we've now found is people just accepted London is London... We may lose a few thousand jobs in banking but we might gain a few thousand in [the tech industry]," he said.
Northacre is developing another project of 72 luxury apartments across from Buckingham Palace. More than half of the 52 apartments that have already been sold in the development went to foreign buyers, Barattieri said.
"The investors are really looking at a three to five year view and the feeling that Brexit is a short term issue that will get resolved," said JLL's McKintosh.
Lower prices are certainly helping to keep foreign buyers interested.
London home prices slipped 0.6% in the quarter ended September, according to mortgage provider Nationwide. It was the first city-wide decline in prices since the global financial crisis. (Average prices are still up 56% from a decade ago.)
Central London real estate prices have taken a much bigger hit recently.
Savills, a leading U.K. real estate agency, said prices across London's prime housing markets dropped 1.2% in the third quarter of this year. Prices are now 8% below their 2014 peak, it added. Prices for properties worth more than £2 million have dropped even more over that period. They're down by 12.5%.
But Savills predicted last month that the most desirable London neighborhoods could see prices rise 20% by 2022, once the uncertainty of Brexit clears.