S'poreans love affair with London to continue

London property will continue to remain an attractive proposition for Singaporean buyers and investors during 2012, according to UK-based agents and developers.

The number of local buyers in the market has been increasing throughout 2011, although in recent months the actual percentage of overseas investors as a whole has declined because more Middle Eastern, North African and European buyers have been entering the market.

Martin Bikhit, Managing Director of Kay & Co, said: "The Stamp Duty increases in Singapore, coupled with the sustained weakness of the pound, are likely to result in continued demand for prime central London properties. We would, however, suggest that any investor thinks carefully about the quality and location of where they invest. With hundreds of developments being marketed to Singaporean investors it is very easy to end up buying in a less sought after location and paying the price of a more sought after one."

Camilla Dell, Managing Partner of London buying agency, Black Brick Property Solutions, said: "I predict that we will continue to see Asians buy property in London both for personal use and for investment, and there will be an increase due to the tax increases in Singapore and restrictions on borrowing in Hong Kong."

Gary Hersham, Partner at Beauchamp Estates agreed. He said: "My guess is that with the stamp duty rise in Singapore and the perennial desire from Southeast Asians to buy assets in the safe haven of the UK and London in particular, we will see an increase in demand resulting in an increase in the numbers of units being contracted off plan in central London."

Bikhit noted there is likely to be huge disparity between different markets within the UK. While a large proportion of the country is likely to experience price falls in the coming months, other parts will continue to enjoy price growth. The gap between London and the rest of the country will widen in the next five years. Prices will fall in the UK but the effect will be short lived. London as a whole will experience a very modest drop while Prime Central London will continue to buck the trend and push ahead. He said: "With more people having to rent, there will be an increase of rental prices by some 3 to 4 percent. In all probability, this trend will continue for the next four to five years, at around the same rate of growth each year. As a result we will see an increase in overseas buy to let investors."

Dell said that almost every forecast is saying prices in Prime Central London will go up next year, albeit at a slower pace than this year. Growth this year has been around 12 percent and is forecast to be between 3 and 5 percent next year. Buyers should not focus too much on short term forecasts; long term is the best way to view investing into the London market. At the beginning of 2011, Savills and Knight Frank were predicting little or zero growth on PCL prices, but prices at the end of 2011 have gone up over 10 percent.

She said: "Prices may soften in secondary and tertiary areas, popular with domestic and city buyers, such as Fulham, Putney, Barnes, Clapham, Battersea and even possibly Notting Hill and Holland Park. City bonus money is likely to be non-existent next year, and this could therefore have an impact, as they still make up a significant proportion of London property buyers."

She added that demand from international buyers should continue with force in 2012 as wealthy buyers continue to look for safe havens for their money. "Demand will probably be highest from emerging market countries - Asia, Africa, Russia and the Middle East. The Arab Spring and concerns in Russia about upcoming elections have all caused an increase in buyers from these countries."

Howard Elston, Associate Director of Aylesford International, said continuing chaos in the Eurozone could spell difficult times for the lower/mid-range of the London market. He expects domestic buyers will continue to play a lesser role in prime areas, while international buyers will continue to dominate the market as political turmoil in other areas of the world creates a steady supply of buyers.

Catherine Cockcroft, Head of Rentals at Aylesford International, said: "The rental market is very dependent on what happens to the economy. The Government is indicating that they are going to make it easier for first time buyers to purchase properties, but without the benefit of job security many may opt to continue renting. The properties at the lower end of the market in Central London should continue to rent quickly."

She noted that a significant number of tenants are opting to renew tenancies at the moment, so the rents are usually being increased at least by the RPI which is currently 5.4 percent. The market is suffering from a lack of good quality properties at all levels, as there are less investors coming back into the market due to the yields (currently 2-3 percent) not being high enough. The sales market up to now has continued to be strong, but if this weakens next year and the interest rates remain low, there could be more activity from investors returning to the property market.

She added: "The recent slowdown in applicants is a result of fewer corporate tenants, due to the current economic conditions as well as many current tenants renewing their tenancies. This is as expected, but it is difficult to make any solid predictions for the New Year. However once there is more choice, there will be more movement and the market should become more competitive pushing up the standards in terms of quality of fittings and furniture."

Gary Hersham, Partner at Beauchamp Estates, expects the top end of the market will strengthen with almost no limit on price per square foot. Overseas buyers will continue to find London one of the most appealing cities in the world in which to invest - even a sharp decline in both the UK and Eurozone markets will only encourage buyers of London properties.

He said: "At the top end of the market, currency economics and political matters are not hugely influential on the purchase of high end properties. Buyers at this level are unlikely to be deterred by fiscal policy or the fluctuations of the market - when there is a need to buy a property it is generally implemented instantly irrespective of governments or economies."

Giles Underhill, Director at Vision, added that London's platinum postcodes will continue to soar as prime London property has effectively become a global 'commodity' and its value has almost no connection to domestic affordability.

He said: "The increase in Asian wealth and the popularity of the UK as a 'safe haven' for money from politically and economically troubled states in Europe and the Arab world will continue to push prices up." Related Stories:China property market coolingPhuket's priciest property goes on saleHK luxury rents may drop 10%

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