Asian and Middle Eastern buyers boost London house prices

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The Independent Online

Knight Frank, an estate agency, said its transactions showed a noticeable increase in purchases by buyers from Asia and the Middle East. Purchases of prime London properties by buyers based in Asia Pacific have risen from zero two years ago to almost 10 per cent in the final quarter of last year. Middle Easterners, who were inactive in the London market at the start of 2004, took 7 per cent of the market at the end of 2005.

It contrasts with a decline in American investors, who made up just 3 per cent of sales at the end of last year, compared with 12 per cent two years ago.

"The increasing pace of globalisation has implications for the London residential market," said Liam Bailey, Knight Frank's head of residential research. "Trends show a consistently steady stream of residential purchases from the Middle East, which has been more apparent this year due to the recent surge in oil prices."

He said that they formed the latest wave of foreign buyers, after an influx of Russian money in the early years of the decade.

"Over the coming years, the balance of economic power will shift towards the east as Asian countries emerge as economic superpowers," he said. "Knight Frank data from 2005 suggest there has already been a noticeable increase in purchases from Asia, and with rapid economic growth in the area, it will not be surprising to see a continuation of this trend."

Values of prime property in central London rose 8.2 per cent last year, almost quadruple the growth seen in 2004 and the highest annual growth since 2001, Knight Frank said.

A separate report from Hometrack showed that the average price of a home across the UK has risen 0.4 per cent this month, marking the third consecutive month of house price growth and the highest monthly rise since June 2004.