SELL-OUT launches – that’s what local property agents representing UK and US developers are enjoying.
The buying interest is thanks to depressed prices in the two markets and favourable currency rates; a confluence of factors that is giving Asians a buying opportunity like no other in recent years, leading some overseas developers to even bypass their own markets to market projects here.
When Savills Singapore marketed a high-end San Francisco condominium development last September, for example, it expected to sell fewer than 10 units. In the end, 24 sales for units ranging from US$650,000 to over US$3 million – were closed, says Julian Sedgewick, senior associate director for Savills Singapore’s international residential sales section.
‘It caught us by surprise, as we didn’t expect this. It was the first American property we’d marketed in a couple of years,’ says Mr Sedgewick, who heads the department created just last September to tap the overseas property investment market. San Francisco’s Millennium Tower was built by New York-based Millennium Partners, which holds some Ritz Carlton franchises in the US. The developer had approached Savills to market the property in Asia, says Mr Sedgewick.
The weak US dollar and lower home prices are contributing to the foreign buying spate, especially as there’s now some stability in the market, he says. ‘For investors, this potentially can mean a 20 to 30 per cent capital growth in the next few years.’
The pound’s current low is definitely the reason for the boom in London property sales in Singapore this year, says Stephen Ho, associate director of Colliers’ International’s projects team. ‘The current 2.1 exchange rate is the biggest draw now, with high-end properties costing about 15-20 per cent less than they did in 2007,’ he says.
Prices are creeping up, according to him. But Colliers is still seeing a ’steady flow of good buyers’, rather than the kind of frenzied buying four or five years ago.
Developers are approaching international property agents, and Colliers expects to hold about three exhibitions a month in its bid to represent international developments at asking prices of £pounds;500-£pounds;800 psf in general, in mid-high to high-end projects.
Mr Ho’s advice for would-be buyers is that they should be familiar with the area they’re thinking of buying into. Colliers, for example, mainly markets projects in established locations, rather than regeneration areas in London.
Location, location and location is definitely the mantra when buying overseas, says Doris Tan, managing director of DST International Property Services which specialises in selling London property.
‘With the booming international property market now, buyers have to be very careful about what they’re buying,’ says Ms Tan. A check with the newspaper this week showed some four to five London projects advertised daily, for example. ‘Like all things, location is the most important as the properties in prime locations will come out alright when the economy picks up again,’ she says. ‘Cheap doesn’t mean good.’
International selling activity picked up at the end of last year, says Ms Tan, with some projects, like the Central St Giles development marketed here last week, launching here instead of in London.
DST will also launch some New York property here, but a key drawback is capital gains tax and various other taxes in the US real estate market which the UK does not impose. ‘That said, this is still a good time to consider investing in New York property, but one has to be prepared to hold it for five years or so,’ says Ms Tan.
Who are the buyers? Agents are seeing a wide range – from first-time investors to parents who have children studying in London or US cities. ‘About half are Singaporeans, followed by Malaysians and Indonesians and then about 5 per cent expatriates,’ says Colliers’ Mr Ho.
In London – by far the favoured and familiar market for Singaporeans – the majority buy as an investment, while the rest are mainly parents who buy properties for children studying or working there.
‘Buyers include those who have made money from Asian property so they’re now looking for another place to invest,’ says Mr Ho.
Source: Business Times, 13 Mar 2010