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WITH INVESTORS FROMTHE MIDDLE EAST SEEING

CENTRAL LONDON AS ASAFE PLACE FOR THEIR

WEALTH AND THE RISE OFDEALS THAT COMPLY

WITH SHARIAH LAW,ISLAMIC INVESTMENT IS

BECOMING BIGGERBUSINESS IN THE AREA,

WRITES KATE WHITE

MiddleEastern

money inMayfair

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As economic gloom continues to fasten its grip around manywestern economies, further east it’s a different story.

The Middle East was the only region in the world where the wealthof its high net worth individuals increased last year, according to areport by Capgemini and RBC Wealth Management.

The number of Middle Eastern millionaires grew by 2.7 per cent in2011, outstripping the global average of 0.8 per cent. And with acombined investible wealth of $1.7 trillion, these super-rich individualshave just one problem: how to spend it.

“Almost 25 per cent of the world’s population are Muslim, andtheir wealth is growing very rapidly indeed. But in the global financialworld, only a fraction of funds under management are Islamic,” saysNicholas Judd, of 90 North Real Estate Partners LLP.

Backed by former Dragon’s Den star James Caan, Judd founded90 North with Philip Churchill in November last year. The independentadvisory firm, which is based on Grosvenor Street, specialises inshariah-compliant real estate investments.

“Global Islamic wealth is very substantial,” says Judd. “But a lot ofit is not managed or invested in any formal capacity, and there’s not ahuge amount for them to invest in where they feel it’s safe.

“Property is a very attractive investment for them, because it fulfilsthe shariah-compliant criteria. Also, once they invest in property, no-one can take it from them. Values might fluctuate, but ultimately itis a store of value.”

A quarter of Muslims will only invest in shariah-compliant products,while a further 33 per cent say they would invest Islamically providedthe return was great enough, according to findings by Ernst & Young.

Islam forbids investing in any industry that is involved in gambling,weapons, pornography, alcohol or tobacco. Earning interest is alsoprohibited, so property deals are financed using shariah-compliantstructures.

While some investors buy properties specifically to produce anincome, others acquire them to live in themselves. Many MiddleEasterners have owned properties in London for 30 or 40 years, butrecently, numbers of buyers have increased.

“A lot of investors are Muslims who have been buying residentialproperty for their own purposes in Mayfair, from kings and emirs tothe high-net-worth and mass affluence sectors,” says Judd.

“Things have been jittery at home, in Jordan, Saudi Arabia andEgypt. They’ve been getting money out of those countries and puttingit into London because they regard it as a safe haven.

Caan agrees. “The Middle Eastern market is awash with capitalright now, and because of the unrest in the Middle East, a lot ofpeople are looking for safe havens to deploy their capital.

“Most Middle Eastern investors have been educated in the UK, ortheir children go to school here, so it seems to be an ideal place forthem. 90 North is positioned to provide that platform for MiddleEastern investors to look at the UK as a potential source ofinvestment.”

While some investors are able to buy properties mortgage-free,rendering the deal shariah-compliant, others take out mortgages frombanks such as the National Bank of Kuwait, Abu Dhabi Islamic bankand high street names including HSBC.

“Five or ten years ago, shariah-compliant products didn’t exist, sothey’d probably have done it conventionally,” says Judd. “Now theseproducts are on offer so they’re taking them up, and that’s why you’reseeing the growth in Mayfair right now.”

In addition, the way shariah-compliant transactions werepreviously structured meant buyers faced double stamp duty onmortgages, but in 2003 this was abolished, leading to a boom inIslamic investments.

Caan also puts the increase in demand down to the credit crunch.“Many investors recognised that the conventional institutions werefairly careless in the way they provided structured finance,” he says.

“Therefore a lot of Middle Eastern investors have gone back totheir roots and want a financial structure that they’re more familiarwith. Shariah-compliance is what they know, it’s their culture, it’s whatthey understand and it gives them comfort.”

Judd and Churchill have 40 years’ combined experience in realestate and finance, and have conducted £1.1 billion of shariah-compliant real estate transactions between them over the last tenyears.

90 North finds property investments, negotiates them withshariah-compliant debt finance and packages them up, offering themto clients as an investment solution. An unmodernised Mayfairtownhouse with development potential could be an example.

“One reason our clients love London and the UK is because theytrust English law,” says Judd. “In many places, if there’s financial fraudor difficulty involving an investment, your chances of relying on the laware very limited indeed.

“But in this country we have an independent judiciary, based onlaws going back centuries, and investors from all over the worldunderstand that if there’s an issue with an investment that’s gonewrong, they have a chance of financial recompense.”

The fact that the UK is not part of the single currency is also adraw. “People trust the pound as a currency, whereas the Eurothey’re very worried about, because there’s so much bad news,” saysJudd.

Mayfair in particular has huge appeal. “Mayfair is the centre of theproperty globe,” says Judd. “Investors regard it as being one of thesafest places in the world to put their money long-term.”

Middle Easterners like Mayfair’s proximity to their home countries –it’s only about a seven-hour flight from Riyadh, Kuwait and Bahrain –and the top restaurants, luxury brands, closeness to Hyde Park, andeven the weather.

“At this time of year in Bahrain it’s about 46 degrees and 90 percent humidity,” says Judd. “The heat is ferocious. So while you mightthink 18 degrees centigrade in London is rotten, it’s heaven for them.”

Demand shows no signs of slowing, says Caan. “Mayfair pricesare now almost getting to the point where they are beyond the reachof the domestic investor, whereas the international investor, who isvery liquid right now, finds it an attractive investment.

“While the Middle Eastern market is strong and while oil pricesremain high, I’m very confident that demand for UK real estate willcontinue and will be a very strong asset class.”

FROM LEFT TO

RIGHT: PHILIP

CHURCHILL,

FAISAL BUTT,

JAMES CAAN AND

NICHOLAS JUDD

TWO YOUNG estate agents have launched aluxury Mayfair property consultancy for theprime central London residential market.

Giles Hannah and Thomas VanStraubenzee set up VanHan with the backingof real estate investment firm Palmer Capital,which owns a one-third stake in the company.

Hannah, 29, is overseeing residential sales,which also encompasses new developmentsales and marketing. Van Straubenzee, 30, isacting on the buying side, sourcing andnegotiating properties for high-net-worthclients to purchase.

The friends and business partners, whoalready have three deals under way, havestrong previous experience in luxury realestate. Hannah worked at Savills, where hewas involved in selling billionaires’ block offlats One Hyde Park and the Lancasters. Hethen ran the Europe and Middle East desks atChristie’s International Real Estate, where heled the sale of the serviced apartments at theBulgari hotel in Knightsbridge.

Van Straubenzee has worked in the primecentral London residential market for nineyears, sourcing and buying properties onbehalf of the über-rich.

The pair have built up an extensivenetwork of wealthy individuals, includingsports and music stars from the UK, HongKong, Russia and the Middle East, and ruling

families from the Gulf, sovereign wealth funds,private banks and law firms.

“Tom and I were very keen to start our owncompany,” says Hannah. “Tom’s an expert inhis field on the buying side, and we thoughtthat could fit together well with my salesexperience. We also thought there was demandfor a really boutique operator with a fantasticlevel of service, which we could provide.”

For Van Straubenzee, the job involvessitting down with a client, working out theirexact requirements, and then sourcing themthe perfect property. “Clients don’t necessarilyknow London very well,” he explains.

“They might go and buy on what theythink is a good street, only to find it’s actuallya busy road with quite a lot of traffic, and thegardens are quite narrow compared to thenext door street.

“My job is to advise them where would suittheir needs, with parks for their dogs or goodschools for their children. It’s also aboutnegotiating hard on the price, so not only areyou sourcing the property, you’re also makingsure they get the best deal.”

VanHan, based on Bruton Street, will bedealing in properties from £3 million upwards.“We want VanHan to be very service-driven,very niche,” says Hannah. “We’re finding it’s agreat time to be setting up the business.There are real opportunities out there.”

IT’S A NIFTY FEATURE that James Bond

himself would be proud of: a secret door

in the bedroom wardrobe, which leads

straight out of the flat into the apartment

block lobby.

It’s one of several unusual features

in this minimalist property, which is

located on the third floor of a period

building on Balfour Place.

Not only does the wooden bar in the

kitchen morph into a striking, standalone

staircase, but one of the bathroom walls

is made entirely of glass, rendering the

bather completely visible to everyone

else in the apartment (if you’re feeling

shy, a flick of a switch turns it frosty).

The one-bedroom flat also features a

state-of-the-art, integrated home

entertainment system, under-floor

heating and an en suite bathroom with a

large, walk-in shower.

Flat one, 5 Balfour Place is on the

market with Wetherell (020 7529 5566),

priced at £1.75 million.

A high-tech home with a hidden secret

Property pair focus on prime service

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GILES HANNAH (LEFT) AND THOMAS VAN STRAUBENZEE