Saturday, March 30, 2013

Cooling measures drive property investors to look to Europe

The Straits Times  |  March 30, 2013

Mar 30, 2013

Cooling measures in Singapore and Hong Kong have forced investors in both places to look to Europe for their property fix.

The key cities of Munich, Berlin and London have emerged as the main centres for Asian buyers, said IP Global, a Hong Kong-based property company.

"The recent cooling measures in Hong Kong and Singapore have made investors, especially non-residents, think twice about the additional costs (of buying properties there)," said Mr Tim Murphy, founder and chief executive of IP Global, which buys and manages international real estate for clients.

"Most Singaporeans look for $1 million to $3 million price points for overseas developments," he said.

"They prefer one- and two-bedders for these investment properties and are looking for strong rental yields and capital growth. "Some factors that investors consider before taking the plunge include foreign ownership, market performance, ease of buying and financing."

An IP Global report found that Germany came out tops for investors. It noted that there are no restrictions for Singaporeans owning property there.

Munich is particularly attractive to investors as its population is expected to grow by about 11 per cent to 1.5 million by 2025.

Office vacancy rates are also low compared with other major cities, thanks to global and medium-sized businesses driving the strong service-based economy.

Munich residents have purchasing power of about €25,200 ($40,000) per capita per year - one of the highest in Germany.

Berlin is also a popular pick for investment properties.

Tourism is a mainstay of the residential sector with nearly half of the 11 million visitors each year opting for private apartment accommodation instead of hotels, said the report.

Demand for homes and rentals is also attributed to the influx of people into the city.

The report said that 30,000 to 35,000 people move to Berlin every year, creating demand forup to 20,000 new homes annually.

London properties continue to attract foreign investors, lured by the city's status as an investment safe haven.

Mr Murphy said: "Buyers from Singapore and Hong Kong accounted for 40 per cent of purchasers of new-build property in central London in 2011 and 2012."

Homes in Mayfair, Kensington and Chelsea still attract the most investment, while the private rented sector is drawing attention as a potentially undertapped market. The report also indicated that the Crossrail project - which will be completed in 2018 - is expected to boost real estate values in the city's outer districts.

IP Global also tipped Istanbul, Turkey, as Europe's real opportunity market.

"Half the city's population is under 29 years old and global firms are setting up local bases there due to its strong economic potential," said Mr Murphy.

Investment in real estate in Istanbul is expected to grow by US$5 billion (S$6.2 billion) a year as the city eases restrictions on foreign ownership, said the report.

Another strong driver of European real estate comes from Chinese investors.

They have pumped in US$10 billion annually in recent years, up from US$1 billion in 2007.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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