MORE individual investors from Singapore and other Asian markets are growing their presence in other UK housing markets outside of London’s prime areas.
High entry costs and the increased tax burden on pricier residential property in the capital city have driven some East Asian and South-east Asian investors – who traditionally buy in London – to shift their focus to other UK cities such as Manchester, Liverpool and Birmingham in recent years.
Ian Cooke, partner at Keystone Law, said the lower property prices in those cities, coupled with high capital growth rates, have made them “an attractive investment prospect” for Asia-based investors.
An example is Birmingham, where housing prices rose 31.7 per cent in the last decade and are expected to jump by another 21.7 per cent in the next five years. That demonstrates high capital growth rates from properties at more affordable prices, Cooke noted.
“There has also been interest in Oxford, Cambridge and York,” he added.
An analysis by non-profit organisation Centre for Public Data (CFPD) found that northern cities in England and Wales – such as Liverpool, Salford and Manchester – saw an influx in foreign individual buyers in the last decade as new developments sprouted. CFPD said those cities have “significant” numbers of owners from Singapore and China, and the growth reflects investment purchases of flats.
Its research showed 413 property titles in Liverpool registered to individuals in Singapore last August, up 37 per cent from 302 in 2016 and surging multifold from merely two titles in 2010.
Marc von Grundherr, director of lettings and estate agent Benham and Reeves, also noted that the number of residential properties in Manchester registered to Singaporeans climbed 63 per cent in 2021 from a year earlier, while Birmingham saw an increase of 15 per cent.
Still, London, with the country’s most coveted addresses, continues to reign supreme.
More than 12,000 homes in the affluent Westminster neighbourhood were owned by foreigners last year, dominated by buyers based in markets including Singapore and Hong Kong. Individuals in Singapore held about 680 of those properties, growing by 41 per cent from 481 in 2016 and roughly 12 times the 55 homes they owned in 2010.
In Kensington and Chelsea, another wealthy London borough, 402 titles were registered to Singapore individuals last year, up from 45 in 2010, CFPD noted.
Von Grundherr told BT: “We’re simply not seeing any signs that London is falling out of favour with Singapore buyers . . . We continue to see strong and consistent levels of activity via our Singapore office.”
But even within London, some buyers are shunning the city centre where prices are sky-high.
Property developer Barratt London, which has two major developments in the London borough of Newham, said the capital’s suburbs are flourishing as more people move to the outer zones for bigger spaces and a better quality of life.
Barratt London’s international sales and marketing director, Stuart Leslie, noted that some foreign buyers are thus eyeing regeneration zones, where amenities may be better. Regeneration areas in Greater London, such as Hayes, Hendon, East Ham, Catford, Tooting, and Hounslow, could offer a lower initial purchase price and greater capital gains, compared to “their glitzier gentrified neighbours whose house prices have reached their peak”, Leslie said.
CFPD’s analysis showed that individual homeowners from Singapore are most concentrated in the Outer London borough of Hounslow, near Heathrow Airport, owning about 3,700 residential properties there as at last August.
The next most popular districts are the London boroughs of Tower Hamlets and Havering, which had 964 and 838 titles, respectively, registered to Singapore individuals, up from 98 and zero in 2010.
Newbuild homes, especially in high-end projects, have been a perennial favourite among Asia and Singapore-based investors.
Their appetite for high-spec newbuild apartments in popular areas is reflected by major new construction projects in London, Birmingham and Manchester, Cooke said.
Security and ease are a concern, as some buyers are not comfortable in “high-maintenance houses” due to the fear that windows and doors are easily broken into or if there is no block-management company organising maintenance, he noted. “They prefer high-security apartment blocks, with outstanding communal facilities such as gyms, pools, spas and lounges.”
Cheaper investment homes are also in demand. For investors not looking to commit large amounts of capital, or those wishing to build a portfolio of less expensive properties, Cooke has seen interest in investments with a more modest budget of under £750,000 (S$1.3 million), with cities such as London, Birmingham, Manchester, Oxford and Cambridge proving popular.
Von Grundherr said foreigners who are purchasing for investment or for their children are generally interested in flats or smaller homes in high-yield areas, “with low void periods which are likely to bring a good return in the coming years”.
He expects this segment of foreign interest to remain prominent, “particularly now that the international market is starting to find its feet following a difficult few years”.
Pervaze Ahmed, a partner in Withers’ London residential property team, has observed a wide variety of properties, ranging from newbuilds to period properties, appealing to Asian buyers.
A number of UK developers regularly bring their launches to Asian markets, including Singapore, to sell newbuild properties off-plan to purchasers there. “They have been undertaking this for well over a decade because of the demand (in Asia),” Ahmed said.
The number of homes in England and Wales owned by foreign individuals has nearly trebled in the last decade. CFPD found that Singapore, Malaysia and Hong Kong are among the top sources of these buyers, accounting for close to 52,000 homes last August. Singapore-based individuals owned 18,165 residential properties in England and Wales last year, more than double the 7,323 in 2010.
Source: https://www.businesstimes.com.sg/real-estate/singapore-asian-housing-property-investors-branch-out-of-london-to-other-uk-cities
