Investors from the Middle East, especially from the UAE and Saudi Arabia, are more geared towards purchasing 'period' type of properties within London, according to Hamptons International.

'Period' properties are those that are Victorian in style and not essentially purpose-built.

In an interview with Emirates Business, Andrew Phillips, Regional Sales Director, Hamptons International, UK, said: "There are a lot of new developments in London. However, Middle East investors tend to go for prime period properties in London. These are high targets for Middle East investors. Investors from the UAE and Saudi Arabia are active purchasers of such period properties." Phillips also said investors from the UAE and the Middle East were largely cash buyers. "The Emirati and Middle Eastern investors arrive with cash. The top-end of the market has seen a lot of cash-buyers looking to buy into these properties as second homes."

Meanwhile, according to Hamptons, bulk buying into UK properties was not common among investors in the Middle East. "They will probably buy a selection of a new development that is being regenerated or take up several apartments in one building. However, they are not inclined to purchase buildings in bulk in London," said Phillips.

"Of the major investments in London, nearly 20 per cent to 30 per cent are from Middle Eastern purchasers," he added. According to Hamptons, a two-bedroom leasehold property in Thames with direct views of the River Thames is currently valued around £625,000 (Dh3.37 million). A freehold five-bedroom property in Weybridge, Surrey is currently valued around £3.8m while a Victorian-styled family residence of more than 6,000 square feet area with seven bedrooms in East Sheen, SW14 is currently going for £5.2m.

Phillips said Middle Eastern investors are putting in a minimum of £500,000 upwards in properties in the UK and London. "While this is only the minimum investment, the average investment however is in the range of £1m to £10m. Families investing in individual houses are looking at properties in the range of £10m to £60m." He added that a weak pound has been a trigger for a larger investment to flow in from the Middle East into the UK, particularly London.

Hamptons said the UK market has upped 20 per cent to 25 per cent in the last one year. "Further weakening of the pound has led to increased investments in the UK and London properties. In fact, one of the controlling factors in Central London is the weak pound and that has obviously benefitted the international investor. It all boils down to the supply and demand situation. There is very little supply for the demand that is coming up constantly."

Phillips said current mortgage interest rates were at an all-time low in the UK. "Having said that, financial markets in the UK are still very strictly controlled and people in the UK are very strictly vetted before they are granted a loan. Rental yields in the UK are currently averaging returns of around three per cent. On a heady day in the UK, a six per cent or seven per cent return would have been the highest at any given time."

According to Hamptons, a lack of supply has been pushing property prices back up to early boom levels. Hamptons also expects proposed policies of the new coalition government in the UK, which is planning to upwardly revise a capital gains tax from 18 per cent to 40 per cent, to impact the market. "This could signify a major shift. However, this is coalition government talk and hasn't been ratified. The government is also working towards increasing stamp duty charges in 2011 from four per cent to five per cent on purchase of properties worth more than £1m," he said.