Iranian ultra-high-net-worth private and corporate/state-backed buyers will spend up to GBP6 billion over the next 5-10 years on investing in overseas property in locations including London, Dubai, Switzerland, Germany and the South of France, according to new calculations by London estate agent Rokstone.
Led by Iranian born Managing Director Becky Fatemi, whose family before the revolution worked in Tehran for the Shah (King) of Iran, Rokstone has a network of Iranian clients, both nationals and diaspora. Currently 30 per cent of Rokstone¹s clients are from the Middle East, and of these 5 per cent are Iranian. From the uplift in Iranian enquiries since sanctions were lifted, Rokstone calculate that there will be a 25 per cent upturn in Iranian buyers looking for homes in London over the next 12-24 months.
Economic data from JP Morgan trained researchers at New World Wealth reveal that there are some 32,000 high net worth Iranian individuals/households worth over GBP2 million, including 65 individuals/families worth over GBP70 million and four billionaires. Of these, Rokstone calculate that around 1,000 to 1,500 high net worth individuals/families or companies will have the desire to invest money in overseas real estate over the next 3-5 years, with up to 50 of these having the finances to spend up to GBP100 million each on overseas investments.
Given these numbers, Rokstone estimates that up to GBP6 billion could be invested overseas by Iranian investors in international real estate and other lucrative opportunities. Rokstone highlight that even if just 5 per cent-20 per cent of this money comes to London/UK this is still extremely significant sums of money flowing into the London/UK property market.
Becky Fatemi, Managing Director of Rokstone, says: “London will be Iranian’s top location for investing in real estate. Culturally if you are wealthy in Iran you invest in property and jewellery/gold as long term assets. Historically there are deep ties between the UK and Iran. Britain was the colonial power in Iran and it was British firms that first exploited Iran¹s oil reserves. Between 1945 and 1979 the Shah of Iran, his Royal court and the business elite had lots of ties with Britain and the elite owned luxury residential property in London and the home counties.
“Alternative locations have less appeal. Historically, rich Iranians also invested in New York and Los Angeles, but US government primary sanctions remain in place so these choices are not available. Dubai on the doorstep will also be popular but it cannot compete with London’s educational system or cool summer climate. The other historic ties are with Germany, Paris, the French Riviera and Switzerland but London is safer than these since a lot of properties in the capital are in conservation areas where building alterations are restricted so values hold and outperform continental Europe.”
Rokstone says that there will be four types of Iranian investor looking to acquire property in London/UK. The first are private individuals/families, the second are professional investors, the third are private companies and the fourth are quasi-state backed entities or sovereign wealth funds.
Rokstone highlights that private individuals/families will predominantly be looking for London pied-a-terres for themselves or their student offspring, this will predominantly be newly refurbished or recently completed new build homes. Most buyers will look to send anything from GBP1 million to GBP30 million on a London homes, with the top-5 most popular locations for purchase being Knightsbridge, Mayfair, South Kensington, Hampstead and St John’s Wood.
Fatemi says: "During the 1960s and 1970s Iranians and Greeks were the largest buyers of luxury property in Knightsbridge and Mayfair. The elite and by that I mean the top 10 per cent of Iranians in terms of wealth would send their children to school in either the UK or USA and the fashion was to own an apartment in London or Paris, come shopping to Europe in the summer, and own a villa on the Riviera. This is what wealthy Iranian families did before the Shah fell in 1979.
“The new generation of Iranians will be wealthy business people who have prospered in Republican Iran, its a whole new generation and outlook. This is the new business elite, not the old Royal Court. However, the grandparents and older generation still remember London’s best addresses, so new buyers will look at the same locations as they did in the 1960s and 1970s. Over time, as long as the political situation continues to improve, Iranian buyers in London will join the ranks of Qatari, Kuwaiti and Saudi buyers and become significant players in the luxury marketplace again.”
Rokstone highlights that with the British Embassy in Tehran now re-oponed the UK Foreign Office changed its long-standing “no travel advised” stance on Iran to “limited travel is permitted”; and in the next three months it is anticipated that the status will be normalised. Already, British Airways has confirmed that it will re-introduce direct flights to Iran from this summer and Iran Air, the national carrier, has signed a record GBP17.4 billion deal with Airbus to purchase 118 Airbus jets including 12 mega A380s.
Rokstone highlights that London also appeals because it has a sizeable Iranian expatriate community, with a flourishing network of Iranian owned restaurants, cafes and cultural/social organisations. There are over 80,000 Iranian exiles living in London, people who fled when the Shah and Queen Farah fell from power.
Fatemi says: “It will be gradual at first. It will take at least 12 months for people to look at their tax structuring and then 3-6 months to find the right London property and invest. Education is a key part of the attraction, Britain has an outstanding education system and many wealthy Iranians will want their children to have a school or university education in London and they will buy a family flat as a base for them.”
Rokstone observes that there are several significant push factors which will help to further enhance the appeal of overseas investments. Firstly, most Iranians still view the opportunity to get money out of Iran as a limited opportunity, with sanctions easily able to be reintroduced. Secondly, with significant instability in neighbouring Iran and Syria, the opportunity to invest in far removed, stable London is extremely appealing. Finally, with the low and falling price of oil and gas, London real estate provides an enticing appeal to invest in a sector which holds and increases in value.