Singaporeans continue their love affair with London property
As Singaporeans' burgeoning appetite for London's property market continues to thrive, investment firms are launching products to tap into the trend.
Investment firm London Central Portfolio is set to launch a London residential property fund in Singapore next month, focusing on the central districts of the city, and in direct response to growing Singapore demand for London property.
"The fund provides an alternative way to take advantage of this sought after asset class and is particularly attractive to people based overseas, who cannot be a 'hands-on' investor," said Naomi Heaton, CEO of London Central Portfolio. order custom essay
"Whilst there has always been a high level of interest from Asian and Singaporean buyers in Central London property, in the past few years more and more have taken advantage of beneficial exchange rates and sought the safety and relative security of prime London real estate," a spokesperson added.
Singapore's demand for London properties has been heating up as a host of factors drive locals out of the home market into alternative destinations.
Residents have been put off by the swathe of restrictive measures introduced by the Singaporean government in an attempt to cool prices which have risen 60 percent since 2009 helped by low interest rates.
Meanwhile, house prices in central London have been soaring. The latest U.K. government Land Registry data showed the average house price in London was £1.45 million ($2.42 million), following robust growth of 12.3 percent in 2013.
Gavin Sung, head of international property sales for Asia Pacific at Savills' Singapore office, told CNBC that a number of factors continue to drive investment appetite into London from both Singapore and the Asian region as a whole.
"The cooling measures have been an important domestic factor. People that are liquid are looking for alternatives and one of those is London where there are a lot of options. Most look to buy-to-let, where you can take a yield, others buy more for capital appreciation. The strength of the Singaporean dollar in the last two years has been a key driver as London has looked considerably cheaper," he said.
However, Sung added that, in his view, London's ongoing appeal as an investment destination was a more prominent driver of the trend rather than a dramatic increase in Singaporean demand.
"There are no restrictions on international money movement into London. It has an amazing rental story, one of the best education systems in the world, a vibrant culture and an ethnically diverse population, all factors that make London very appealing and aren't going away," he said.
Property prices all across London have been booming in recent times, after the government's Help to Buy scheme - designed to help first-time buyers - spurred an influx of fresh demand.
In October, U.K.-based think tank the Centre for Economics and Business Research forecast London property prices would leap a staggering 43.5 percent by 2018.
London Central Portfolio added that the relatively lower levels of volatility in London property markets, in contrast to Asia, were also a driving force of increased demand in recent times.
"Both Hong Kong and Singapore's housing markets react dramatically in times of economic uncertainty and they saw prices plummet 56 percent and 72 percent respectively in one year, during the credit crunch. This compares with just 11 percent in Central London."
"Focus from Asian investors is also turning more and more to Central London as they become more acquainted with London and realize the extensive over supply of new builds in areas such as Canary Wharf, which is often what is brought out to market to them in Asia," added the spokesperson for the firm.
London Central Portfolio's London Central Apartments II fund will focus on the private rented sector in London and will acquire a diversified portfolio of one to two bed-room properties in all of the prime postcodes surrounding Hyde Park.
The fund is targeting an internal rate of return of 14 percent per annum with a potential return of 100 percent after a five-year hold. Investors can buy shares directly or through regulated entities such as personal pension plans or offshore portfolio bonds and the minimum subscription is £25,000.
More information at: www.cnbc.com