Middle Eastern investors are increasingly investing in London real estate, seeing it as a safe haven for their wealth. Islamic investment is growing as more properties and financing options comply with Sharia law, which prohibits interest and investments in certain industries. Two London real estate firms, 90 North and VanHan, are focusing on facilitating Sharia-compliant property investments for Middle Eastern clients in areas like Mayfair, which is seen as a prime safe investment location close to the Middle East. Demand for London property from Middle Eastern investors is expected to continue growing.

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property
WITH INVESTORS FROM
THE MIDDLE EAST SEEING
Middle
CENTRAL LONDON AS A
SAFE PLACE FOR THEIR
WEALTH AND THE RISE OF
DEALS THAT COMPLY Caan agrees. “The Middle Eastern market is awash with capital
WITH SHARIAH LAW, right now, and because of the unrest in the Middle East, a lot of
ISLAMIC INVESTMENT IS people are looking for safe havens to deploy their capital.
BECOMING BIGGER
BUSINESS IN THE AREA,
WRITES KATE WHITE
Eastern “Most Middle Eastern investors have been educated in the UK, or
their children go to school here, so it seems to be an ideal place for
them. 90 North is positioned to provide that platform for Middle
Eastern investors to look at the UK as a potential source of
investment.”
money in
While some investors are able to buy properties mortgage-free,
rendering the deal shariah-compliant, others take out mortgages from
banks such as the National Bank of Kuwait, Abu Dhabi Islamic bank
and high street names including HSBC.
“Five or ten years ago, shariah-compliant products didn’t exist, so
they’d probably have done it conventionally,” says Judd. “Now these
Mayfair products are on offer so they’re taking them up, and that’s why you’re
seeing the growth in Mayfair right now.”
In addition, the way shariah-compliant transactions were
previously structured meant buyers faced double stamp duty on
mortgages, but in 2003 this was abolished, leading to a boom in
Islamic investments.
Caan also puts the increase in demand down to the credit crunch.
“Many investors recognised that the conventional institutions were
fairly careless in the way they provided structured finance,” he says.
A s economic gloom continues to fasten its grip around many
western economies, further east it’s a different story.
“Therefore a lot of Middle Eastern investors have gone back to
their roots and want a financial structure that they’re more familiar
The Middle East was the only region in the world where the wealth with. Shariah-compliance is what they know, it’s their culture, it’s what
of its high net worth individuals increased last year, according to a they understand and it gives them comfort.”
report by Capgemini and RBC Wealth Management. Judd and Churchill have 40 years’ combined experience in real
The number of Middle Eastern millionaires grew by 2.7 per cent in estate and finance, and have conducted £1.1 billion of shariah-
2011, outstripping the global average of 0.8 per cent. And with a compliant real estate transactions between them over the last ten
combined investible wealth of $1.7 trillion, these super-rich individuals years.
have just one problem: how to spend it. 90 North finds property investments, negotiates them with
“Almost 25 per cent of the world’s population are Muslim, and shariah-compliant debt finance and packages them up, offering them
their wealth is growing very rapidly indeed. But in the global financial to clients as an investment solution. An unmodernised Mayfair
world, only a fraction of funds under management are Islamic,” says townhouse with development potential could be an example.
Nicholas Judd, of 90 North Real Estate Partners LLP. “One reason our clients love London and the UK is because they
Backed by former Dragon’s Den star James Caan, Judd founded trust English law,” says Judd. “In many places, if there’s financial fraud
90 North with Philip Churchill in November last year. The independent or difficulty involving an investment, your chances of relying on the law
advisory firm, which is based on Grosvenor Street, specialises in are very limited indeed.
shariah-compliant real estate investments. “But in this country we have an independent judiciary, based on
“Global Islamic wealth is very substantial,” says Judd. “But a lot of laws going back centuries, and investors from all over the world
it is not managed or invested in any formal capacity, and there’s not a understand that if there’s an issue with an investment that’s gone
huge amount for them to invest in where they feel it’s safe. wrong, they have a chance of financial recompense.”
“Property is a very attractive investment for them, because it fulfils The fact that the UK is not part of the single currency is also a
the shariah-compliant criteria. Also, once they invest in property, draw. “People trust the pound as a currency, whereas the Euro
no-one can take it from them. Values might fluctuate, but ultimately it they’re very worried about, because there’s so much bad news,” says
is a store of value.” Judd.
A quarter of Muslims will only invest in shariah-compliant products, Mayfair in particular has huge appeal. “Mayfair is the centre of the
while a further 33 per cent say they would invest Islamically provided property globe,” says Judd. “Investors regard it as being one of the
the return was great enough, according to findings by Ernst & Young. safest places in the world to put their money long-term.”
Islam forbids investing in any industry that is involved in gambling, Middle Easterners like Mayfair’s proximity to their home countries –
weapons, pornography, alcohol or tobacco. Earning interest is also it’s only about a seven-hour flight from Riyadh, Kuwait and Bahrain –
prohibited, so property deals are financed using shariah-compliant and the top restaurants, luxury brands, closeness to Hyde Park, and
structures. even the weather.
While some investors buy properties specifically to produce an “At this time of year in Bahrain it’s about 46 degrees and 90 per
income, others acquire them to live in themselves. Many Middle cent humidity,” says Judd. “The heat is ferocious. So while you might
Easterners have owned properties in London for 30 or 40 years, but think 18 degrees centigrade in London is rotten, it’s heaven for them.”
recently, numbers of buyers have increased. Demand shows no signs of slowing, says Caan. “Mayfair prices
FROM LEFT TO “A lot of investors are Muslims who have been buying residential are now almost getting to the point where they are beyond the reach
RIGHT: PHILIP property for their own purposes in Mayfair, from kings and emirs to of the domestic investor, whereas the international investor, who is
CHURCHILL, the high-net-worth and mass affluence sectors,” says Judd. very liquid right now, finds it an attractive investment.
FAISAL BUTT, “Things have been jittery at home, in Jordan, Saudi Arabia and “While the Middle Eastern market is strong and while oil prices
JAMES CAAN AND Egypt. They’ve been getting money out of those countries and putting remain high, I’m very confident that demand for UK real estate will
NICHOLAS JUDD it into London because they regard it as a safe haven. continue and will be a very strong asset class.”

2. 94
A high-tech home with a hidden secret
property
IT’S A NIFTY FEATURE that James Bond building on Balfour Place. The one-bedroom flat also features a
himself would be proud of: a secret door Not only does the wooden bar in the state-of-the-art, integrated home
in the bedroom wardrobe, which leads kitchen morph into a striking, standalone entertainment system, under-floor
straight out of the flat into the apartment staircase, but one of the bathroom walls heating and an en suite bathroom with a
block lobby. is made entirely of glass, rendering the large, walk-in shower.
It’s one of several unusual features bather completely visible to everyone Flat one, 5 Balfour Place is on the
in this minimalist property, which is else in the apartment (if you’re feeling market with Wetherell (020 7529 5566),
located on the third floor of a period shy, a flick of a switch turns it frosty). priced at £1.75 million.
Property pair focus on prime service
TWO YOUNG estate agents have launched a families from the Gulf, sovereign wealth funds,
luxury Mayfair property consultancy for the private banks and law firms.
prime central London residential market. “Tom and I were very keen to start our own
Giles Hannah and Thomas Van company,” says Hannah. “Tom’s an expert in
Straubenzee set up VanHan with the backing his field on the buying side, and we thought
of real estate investment firm Palmer Capital, that could fit together well with my sales
which owns a one-third stake in the company. experience. We also thought there was demand
Hannah, 29, is overseeing residential sales, for a really boutique operator with a fantastic
which also encompasses new development level of service, which we could provide.”
sales and marketing. Van Straubenzee, 30, is For Van Straubenzee, the job involves
acting on the buying side, sourcing and sitting down with a client, working out their
negotiating properties for high-net-worth exact requirements, and then sourcing them
clients to purchase. the perfect property. “Clients don’t necessarily
The friends and business partners, who know London very well,” he explains.
already have three deals under way, have “They might go and buy on what they
strong previous experience in luxury real think is a good street, only to find it’s actually
estate. Hannah worked at Savills, where he a busy road with quite a lot of traffic, and the
was involved in selling billionaires’ block of gardens are quite narrow compared to the
flats One Hyde Park and the Lancasters. He next door street.
then ran the Europe and Middle East desks at “My job is to advise them where would suit
Christie’s International Real Estate, where he their needs, with parks for their dogs or good
led the sale of the serviced apartments at the schools for their children. It’s also about
Bulgari hotel in Knightsbridge. negotiating hard on the price, so not only are
Van Straubenzee has worked in the prime you sourcing the property, you’re also making
central London residential market for nine sure they get the best deal.”
years, sourcing and buying properties on VanHan, based on Bruton Street, will be
behalf of the über-rich. dealing in properties from £3 million upwards.
The pair have built up an extensive “We want VanHan to be very service-driven,
network of wealthy individuals, including very niche,” says Hannah. “We’re finding it’s a
sports and music stars from the UK, Hong great time to be setting up the business.
Kong, Russia and the Middle East, and ruling There are real opportunities out there.” GILES HANNAH (LEFT) AND THOMAS VAN STRAUBENZEE