Singaporeans continue to invest in London properties

Despite rising interest rates and a capital gains tax to be implemented in the UK in 2015, Singaporean investors’ appetite for properties in London remains strong.

In addition, buyers are getting younger too.

A serious housing shortage has pushed up average property prices in London by over 25 per cent over the last four years.

Colliers International expects London property prices to ease over the next two years, after the 5.5 per cent increase in 2013.

In 2014, London properties may see slower price growth of 4.5 per cent and it will decelerate further to 4.2 per cent in 2015.

Yet, a rebound in prices is expected in 2016 and 2017, at about 6.5 per cent growth annually.

Singaporeans have never stopped looking to buy properties in London, despite interest rates possibly rising.

Nina Davies, operations director of international properties at Colliers International, said: “We haven’t seen any nervousness at all in the market. That does not reflect in what we have seen in our buyers and potential buyers. We have certainly seen strong demand.”

Financing has never been a major consideration for local investors when snapping up London properties.

After all, one out of three Singaporean buyers of foreign property uses cash to finance their purchases.

This is according to a survey of 250 buyers in Singapore by Colliers International.

And a quarter of respondents have at least one property in London.

Market experts have said Singaporean buyers are no longer just middle-aged, as buyers aged between 25 and 30 are increasingly putting their money on a property in London.

Singaporean buyers usually have a longer investment view of five to 10 years, renting out the property to generate returns.

Current yield in central London is about 3 per cent, according to Jones Lang LaSalle.

Doris Tan, director of Jones Lang LaSalle Residential, said: “With London as the cosmopolitan city, you can see that there is an influx of people every year. Rentals will not be so much of a problem.

“There is a short of supply but the demand is always there. So rentals should be attractive. But of course, if prices continue to go up, yields will be lower, it is still attractive in the sense that there will be capital gains along the way.”

Now, investors will have to factor in the capital gains tax for non-residents in the UK, which will come into effect in April 2015.

Source : Channel NewsAsia – 10 Jan 2014

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