You’ll probably know that we regularly visit South East Asia to meet our many overseas clients. We’ve just returned from our latest trip – to Singapore, Kuala Lumpur and Hong Kong and as usual, we were overwhelmed by the continuing interest in London property investment.
I say this after every trip, but this has been our busiest ever! Our last roadshow was in April – it was very well attended and we met many private investors. This trip has surpassed it – we co-hosted an extremely successful seminar with Citibank in Hong Kong and another well attended event in Kuala Lumpur with leading bank OCBC. And in Singapore we even had to set up an additional seminar to meet demand. As ever, we met a mix of established and new investors, all very well informed about the London property market.
It was particularly interesting to see that the recent announcement by Singapore’s central bank to impose measures on loans taken out by Singaporeans for their investments, seems to have had little impact so far on investment in London property.
You can find more information on the Singapore central bank’s decision on a previous blog but in a nutshell, the bank is stipulating that a property buyer’s monthly payment must not exceed 60% of his income and that Singaporeans who buy in companies must pay in cash and must not be financed by Singaporean financial institutions.
So where are South East Asian investors buying residential property in London? Well, unsurprisingly, prime London and the fringes remain attractive. There are practical reasons for this – for example, Malaysian banks usually only lend on properties in Zones 1 and 2. But central London also has a unique cachet. Wealthy investors love the exclusive properties and frequently, they’re not looking to borrow funds, but simply searching for a safe place to put their money, so banks’ lending criteria are not necessarily an issue. And prime central London continues to offer the best, long-term potential for capital growth.
Having said that, of course for many investors rental yield is an important factor. Many of these investors are looking at properties on the outskirts of central London where purchase prices are lower yet rental demand just as high, providing them with a better rental yield (typically around 5%).
They almost always buy in new developments and East London and Docklands new build properties are particularly sought-after. Developments such as Marine Wharf in Greenwich, Avant Garde in Shoreditch and Altitude in Aldgate (the latter two are both in Zone 1 so fall within Malaysian banks’ lending criteria), are all selling well and attracting a lot of interest. In Kings Cross, NW1, an area that has seen massive regeneration in recent years thanks to the construction of the Kings Cross St Pancras International rail terminal, a prestigious 25 storey tower, the Triton Building, conveniently within Zone 1 and offering easy access to the City and West End, is another sought-after location for investors.
It seems that none of the sparkle has faded from London’s residential rental property market. With the global economic outlook remaining uncertain and the Euro crisis far from over, the UK continues to offer economic stability, a transparent legal system and liberal tax system. We’re already planning our next overseas trip later this year.
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