By Golnar Motevalli

LONDON (Reuters) - Some London-based designers may be seeing fewer U.S. and European customers because of the credit crunch, but demand from the Middle East remains strong.

London Fashion Week, which showcases top British designers such as Vivienne Westwood, Paul Smith and Julien Macdonald, has seen an increase in buyers from Middle East boutiques and stores driven by customers keen to lap up the luxury goods.

"There are more Middle East buyers," Harold Tillman, Chairman of the British Fashion Council (BFC), which organises London Fashion Week told Reuters.

"I think that in certain parts of the Middle East new shopping malls are being built and luxury design is higher up on the agenda," Tillman added.

No specific numbers were available from the BFC on the breakdown of buyers, but it says London Fashion Week generates some 100 million pounds in business and 50 million pounds in media advertising.

While most of the big name designers shrugged off credit crunch concerns and a looming recession, up-and-coming young designers such as Afshin Feiz said they are definitely feeling the pinch in terms of U.S. sales.

"It's (credit crunch) affected me already. I started off in New York and a large part of my business was in New York ... I've lost a lot of the boutiques there because the dollar is so low and my clothes were very expensive over there," Feiz said.

"But in a way it pushed me to the Middle East and Russia and now I'm doing really well over there ... it's a massive market for me right now. I've got shops in Dubai, Riyadh, Cairo, Kuwait," he added.

Feiz, who used to show at New York Fashion Week, said he preferred London, because young designers have more freedom to develop their businesses while staying creative and innovative.

"I think generally what I like about London, besides the fact there are less rules, is that most of this new group of London young designers are much more conscious of the aspects of creating a real business," Feiz said.

High end fashion retail chain Boutique 1, which has stores across the Middle East spreading out from its Dubai flagship, describe their customers as "fashion forward" and interested in cool, new designers.

"The credit crunch hasn't affected us at all ... We're not having to play it safe. We don't have to, but in Europe they obviously do," Boutique 1 director of buying Nicole Robertson told Reuters.

"Although I am conscious of (the credit crunch) I'm more conscious of our market and we want to continue picking up the new hit designers."

Having such a wealthy customer base helps, Robertson said, and the demand to have a wide choice of the hippest, latest designs means she is always on the hunt for unique pieces.

"Our customers want things that are very exclusive because they go to the same events and the same parties. We're always trying to get the newest thing."

In some markets in the Middle East, the looming spectre of rising inflation could eventually limit demand for luxury items.

"I predict that consumer demand for luxury goods will diminish over time, inflation is hitting the region hard," said Kuwaiti Zahra Muhammad, who writes a fashion blog called "Kuwait Style" in her spare time.

"People are always on the lookout for the latest trend, they are constantly on the hunt for something different, new and exciting ... It is a prosperous region and there is plenty of disposable income to spend on luxury items."

(Reporting by Golnar Motevalli, additional reporting by Cindy Martin, editing by Paul Casciato)