Saturday, March 2, 2013

London homes a big draw for Singapore investors

Government's property cooling measures and Singapore dollar's gain drive buyers
The Business Times  |   MARCH 02, 2013

[SINGAPORE] BERKELEY Group Holdings, the UK's second-largest homebuilder by market value, is benefiting from Singapore's efforts to cool its property market as new restrictions and a weak pound attract investors to London.

The island nation is the biggest overseas buyer of homes constructed by Berkeley, which sells 40 per cent of its properties to people living outside the UK, managing director Rob Perrins said in an interview in Singapore on Thursday. Hong Kong and Malaysia are the next-biggest markets for the company based near the UK capital.

"People like property, it's bricks and mortar, especially at the moment with the Singapore dollar so strong against the pound," Mr Perrins said. That's "obviously attracting investors into London as well", he said.

Singaporeans are looking abroad for investments as the local currency rose to a record against the pound, making home purchases cheaper, and as they face government measures at home to rein in property prices that have reached an all-time high.

Berkeley is opening its second office in Asia in Singapore's Marina Bay Financial Centre to cater to increasing demand, Mr Perrins said.

London's housing market is outperforming the rest of the UK and in recent months has seen a "marked pick-up" in momentum, according to the Royal Institution of Chartered Surveyors. An index of UK house prices rose to the highest in 21/2 years in December as measures to boost credit made property brokers more optimistic, London-based RICS said in January.

Berkeley, which has offices in Hong Kong and Dubai, is seeking to attract more international buyers, who tend to make purchases earlier in the development process than UK customers, Mr Perrins said. About 70 per cent of overseas buyers purchase a property in London as an investment, while the rest seek a second home or a residence for their children studying there, he said.

"Singapore investors are very savvy," Mr Perrins said. "A lot of Singaporeans know London better than many Londoners do. They do a lot of research before they buy."

The Singapore government is trying to curb property market speculation. A 1,636 square foot condominium in the Marina Bay financial district sold for S$4.4 million in November, government figures show. A unit about the same size in London's Canary Wharf was priced at £2.3 million (S$4.3 million), broker Foxtons Ltd said.

Berkeley's first-half profit rose 45 per cent as the company sold more homes with wider margins, the Cobham, England-based company said on Dec 7. Revenue rose 69 per cent to £686 million.

It sold 1,927 homes in the first half of 2012 compared with 1,506 a year earlier at an average price of £335,000. That compares with an average selling price of £254,000 in the first six months of the previous fiscal year.

The Singapore dollar strengthened on Feb 25 against the British pound to the highest on record dating back to 1981, according to data compiled by Bloomberg.

Currency fluctuations are helping drive sales of apartments at Battersea Power Station, according to Battersea Power Station Development Co.

"The currency is huge," Rob Tincknell, the company's chief executive officer, said in an interview at the property. "Look at the last few weeks, they've made a fortune."
More than half of the development's apartments have been sold in overseas markets including Singapore, Malaysia and Hong Kong, Mr Tincknell said. Around 30 of the 860 apartments making up the project's first phase are unsold, he said.

Singapore earlier this week announced plans to raise property levies for luxury homeowners and increase duties on investment properties that are vacant or being rented out.

Those steps came after officials introduced a seventh round of real estate cooling measures in January, which included limits on how much buyers seeking a second mortgage can borrow relative to the value of their properties.

People applying for a second or subsequent home loan will also have to pay a 25 per cent cash down payment, from 10 per cent previously.

"We landed Singapore the day after the measures were introduced," Mr Tincknell said. "It was the talk of town. They are trying to slow down that market considerably."

The median price per square metre for condominiums jumped to S$11,056 in the fourth quarter, the highest in Urban Redevelopment Authority data dating back to 1998.

Berkeley has invested about £1 billion in the UK property market since 2007 and now builds about 15 per cent of all London homes, Mr Perrins said.

"Confidence is returning," he said. "People like property as they see it as an inflation hedge."

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

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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