Dubai crisis seen as hiccup for London luxury hub

RELATED NEWS Dubai World will not give up on crown jewels London's banks rebound as Dubai fears ease Expert take: How serious is the Dubai crisis? Dubai 'strong and persistent' says ruler IMF says UK banks most exposed to Dubai, Asia limited

Dubai's debt crisis is a hiccup for exclusive fine jewellery and luxury goods shopping in London but could be a boon for investment in prime real estate.

Dubai's financial convulsions should not have much impact on demand for top-end engagement rings, while the exodus from Dubai property purchases could be an opportunity for investment in London real estate.

"For me, the Middle East has always been an extremely, extremely trustworthy place to do business," said Alisa Moussaieff, co-owner of Moussaieff, high in the hierarchy of Bond Street, London's hub for exquisite jewellery purchases.

"The trust has not been shaken by this hiccup.

"I call it a hiccup even though in the financial markets it is a very serious hiccup," she said at her boutique in the London Hilton hotel on Park Lane, sitting at a desk festooned in emeralds, sapphires and pearls about to be mounted.

Fine jewellers and luxury goods merchants said they expected some buyers, especially those exposed to Dubai's meltdown, such as property developers and bankers, to stand back temporarily.

"It depends what they've got their fingers into," said Roy Connor, store manager of William & Son, an emporium owned by luxury goods czar William Asprey in upscale Mayfair.

But purchases of jewels for weddings should hold up.

"Everybody is being a little bit more cautious," said Marwan Chatila, owner of Chatila, another leading Bond Street jeweller which regularly serves ultra-wealthy Middle Eastern customers.

"But there are always weddings in the Middle East.

"And people who used to spend 'x', now they may spend half of that," Chatila told Reuters television in an interview.

He said people were increasingly buying fine jewels as a commodity investment rather than as an adornment.

"There is a class of clients now who are buying diamonds as a commodity rather than jewellery for sentimental value. A lot of people have little confidence in the dollar. A lot of people expect very high inflation in the next 2-5 years."

He added, "Some very sophisticated investors are buying important diamonds and keeping them aside as portable wealth."

Real Estate

Whilst the turmoil in Dubai may be a temporary setback for jewel purchases, it is an opportunity for property investment in London, with a slide in the pound creating bargains.

"The buyers we see a fair amount of are from Saudi Arabia, Qatar, Bahrain and Abu Dhabi," said Jonathan Hewlett, head of London region at upmarket property consultant Savills.

"Recently they have benefited not only from the drop in values but also from exchange rates and so we have seen them continue to invest both commercially and residentially."

He added, "Going forward we don't see that changing.

"You could argue that rather than investing out there (in the Gulf), more of them will decide to invest over here because it is safer."

A new report from Barclays Wealth showed a swing in sentiment back to British property among high net worth individuals.

"Investors believe we are approaching the beginning of the end of the downturn," said Rory Gilbert, head of UK high net worth, UK & Ireland Private Bank at Barclays Wealth.