The riots add to the UK’s myriad problems including a 20 per cent dive in the FTSE 100 in the last month, tumbling manufacturing figures and a yawning trade gap of nearly £9 billion.

Editor's note: Wealthy Asian buyers have been among those boosting the prime central London residential property market, as has been noted in recent reports, with buyers from countries such as China. The recent violent disorder in London, some of it a short distance away from the capital's most sought-after residential areas, has achieved global media coverage. 

The UK riots could not have come at a worse time.

Adding to the country’s myriad problems including
a 20 per cent dive in the FTSE 100 in the last month, tumbling manufacturing
figures and a yawning trade gap of nearly £9 billion, the riots igniting London and other UK regions spell yet more bad news. 

One of the few chinks of light in the UK
economy is the ostensibly impervious property market in London’s best postcodes.
Values of real estate in neighborhoods like Mayfair and Knightsbridge rocketed
nearly 10 per cent over the last 12 months, a third over 2009’s peak. A wave of
rich international buyers, spooked by global socio-political turmoil and the US
and Eurozone debt crisis, want to buy London property as a wealth haven,
according to agent Knight Frank.

The love affair with London real estate stems
from its reputation as a safe and stable financial and political haven, say
agents. But in light of the last three days – ugly scenes of widespread
violence and vandalism, 16,000 police swarming the streets, nearly 600 arrests,
dozens of injuries and one fatality – is this still a fair assertion?

True –the riots so far have been localized in
less affluent areas, far from the gentrified squares of Mayfair and Chelsea.
 The focal points were initially Tottenham, where alleged criminal Mark
Duggan’s death first sparked the riots, followed by Ealing, Croydon and
Peckham. Riots here, say agents, will not impact London’s high-end property
market.

“A load of yobs looting a Curry’s in Peckham
(a budget department store) for trainers and TVs is not going to dissuade a
wealthy Oligarch from buying a property,” said Kensington-based estate agent
Charles McDowell.

But since the outset of the turmoil on
Saturday night, further riots have spread like wildfire, whipped up through
social media platforms. Wealthier areas like Clapham, Lavender Hill, Balham,
Tooting and even the trendy celebrity hotbed of Camden and Chalk Farm where
Kate Moss, Sienna Miller and Chris Evans have homes, have been victim to
large-scale lootings. Last night The King’s Road in Chelsea, Notting Hill and
the iconic Sloane Square were all targeted of terrifying indiscriminate
violence. Shops, police stations, cars and even private homes, all came under
attack.

It could only be a matter of time until
Mayfair is targeted by the angry mob. And when that happens, it will be “game
over” for London’s reputation as a safe and stable jurisdiction for the rich,
says Gary Hersham, founder of estate agent Beauchamps Estates.

“If the violence migrates to the West End it
would greatly affect the influx of wealthy foreigners into London on a
long-term basis,” he said. “By and large London is considered a safe haven. It
is amazing how quickly a good reputation is lost. And for the super-rich,
security is the number one priority,”

McDowell believes that at the moment the
riots are more about securing “free trainers and TVs” than sending any
political message. But things could change. He said: “Currently the riots are
pretty mindless. But it would be bad news if it spreads West. It could escalate
to become something like the attacks on Fortnum & Masons (a high-end
department store) earlier this year by anti-cuts protesters. In which case, shops
in Mayfair or Harrods in Knightsbridge would be obvious targets.”

In a telling sign of the severity of the
problem, today Parliament was recalled for crisis talks on how to control the
situation. Boris Johnson, Mayor of London, told international media: “This is a
fundamentally safe city.”

London’s reputation as a long-term financial
center is already hanging in the balance. The £30,000 tax on non-domiciled
individuals, the 50p tax rate on higher earners and uncertainty over future
regulation has pushed a number of valuable entrepreneurs and businesses to
emigrate to more appealing tax jurisdictions like Switzerland, Ireland and
Singapore. Many of the City’s largest employers including banks JP Morgan, HSBC
and Barclays, have mooted leaving for more favourable regions.

The City does not need another black mark
against its name.

The events may be characterized by mindless
so-called “rioting-meets-shopping”, but the last three days have exposed
serious undertones. According to a report on the BBC, two 17-year-olds told
police that they were rioting because they were "showing police and rich
people they could do whatever they wanted".

Not the message that London wants to send.