Why Singaporean investors are scrambling for London properties

Cash buyers jumped to 33%.

According to a release, London property continues to attract Singaporean investors due to good rental yields and strong capital gains. 

Research by Colliers International Singapore shows increasing levels of interest from Singaporean buyers in London property ownership with prices and yields showing value for money. The number of people attending Colliers International property exhibitions in Singapore is up 15% in the last three months.

The London residential market remains attractive to Singapore buyers and investors because of its stability and liquidity. The devaluation of the pound against the Singapore Dollar since 2008 has also helped to make London more affordable to overseas buyers.

Nina Davies, Colliers Operations Director, International Properties, Asia, said, “It’s a well-known fact that London attracts a huge number of foreign investors. Over the last 15 years many of our buyers have achieved very strong returns through investing in large regeneration areas where there is good potential for capital gains in the medium term.” 

The economic and political uncertainty in the Eurozone has only served to bolster London’s status as a global “safe haven”. The UK’s strong reputation in higher education is another drawcard for international students and families.

Davies explains that most buyers from Singapore are attracted to London for the following reasons, “We find that our buyers are investing in London for a range of reasons. The majority are investors, looking for capital growth and yield, with yields generally between 4.5% - 5.5%. We also have buyers who are looking to purchase an apartment for their children to live in while they are studying in London.

Over the last 12 months we have a seen a trend of more of our buyers using cash for their purchases, up from 19% in February 2012 to 33% in February 2013. This increase in cash buyers may be local buyers who are realising profits on their investment properties here in Singapore, moving those profits to London, while the Singapore Dollar is strong against the pound.”

Asian buyers continue to focus on London, particularly new build flats, more than on the secondary markets. Overseas buyers also prefer locations that are close to public transport, with short travel times to London Universities. 

The rental market remains strong, as many British would-be buyers are effected by restrictions on lending and are forced to rent.

The study carried out by Colliers International also showed that rents of luxury apartments in Singapore have declined or flat-lined in the past year, while capital values (cost per unit) have increased. Higher property prices have resulted in a negative impact on yields as rental returns remained stable.

It noted that Singapore has largely trailed London prices in the past 10 years. Since around June 2011, Singapore prices have flattened, while London prices have spiked. Also, increased numbers of Singaporean buyers are purchasing London property with cash, as opposed to mortgage finance.

Furthermore, property prices in Singapore tend to be more volatile – they often drop more steeply than London in a down market, and go up more sharply in a bull market.