Answers to UK real estate post-Brexit posers

UK real Estate

By THE STAR

Singapore and Hong Kong buyers are among the savviest of investors in Britain, having started way back in the 1980s.

Malaysians took a greater interest in that market after the 2008 global financial crisis when a local agency began promoting Britain in a big way, which had helped to spur interest.

Singapore’s Jones Lang LaSalle head of research South-East Asia Chua Yang Liang answers questions via email on Singaporeans’ buying interest and makes a brief comparison between the UK and Singapore residential market.

The other email interview is with Knight Frank UK’s global research head on UK residentials Liam Bailey who tackles questions on the residential interest as a result of the weakening pound.

Do you see an interest among Singaporeans for London real estate post-Brexit? It seems to have slowed for Malaysians but there are investors who see opportunities there as a result of the weak pound. Hence, it seems to be both push and pull factors for Malaysians.

Chua: Singapore and Britain also have a strong connection. Singaporean buyers have been buying into that market for the longest time. Brexit has taken buyers by surprise with many of them holding back purchases in the short term while awaiting greater clarity of the exit. The situation is improving gradually.

Which year were the Singaporeans most interested in the London market?

The 2012-2013 period was a strong period for Singapore buyers into the British market. It coincided with the stronger Sing dollar to the pound as well as anti-speculative measures introduced by the government in Singapore to quell domestic housing demand.

Which price segments were the most popular among Singaporeans?

The general appetite is for properties in the price range of £500,000-£1mil.

May I presume most of them were investors?

The profile is quite mixed, based on the projects we have launched, many of the Singaporean buyers are working there, or have children studying in the UK.

It may be difficult to quantify, but is it right to compare Singapore and London properties and say that London is cheaper than Singapore overall? Property developers and consultants always say Malaysian properties are so cheap compared to our neighbours. Because Singapore also attracts a sizeable group of foreigners, would you say London or Singapore is cheaper?

Given the continual correction in home prices in Singapore, the high end residential segment is increasingly looking more attractive than those in many other global cities, including London.

Between 2010 and right up to 2014, there was quite a lot of interest in the London property market from Malaysians as a result of the weak pound. Are those buyers still holding on to their properties?

Bailey: The evidence we have is that investments made during that period were made by long-term investors looking for a mix of income and capital growth.

Post-Brexit and the weakening Pound, is Knight Frank seeing interest returning? Does this interest culminate in actual purchase?

The London market certainly saw a slowdown in terms of activity from around mid-2014. This coincided with the UK elections, the referendum and rising taxes on property. The market remains weaker than in 2014, but activity has improved in recent weeks – mainly driven by domestic demand within the UK, with some overseas demand which appears to have been prompted by currency play.

What is your medium-term view of Britain’s residential market, both in terms of sales and rental market? Is rental expected to soften in view of the employment and “passporting” issues?

Everything depends on the final form of “Brexit” that Britain secures – there are mixed forecasts for the British economy depending on “hard or soft” Brexit. The one thing which is not in question is that London will continue to remain as a key financial and business centre post-Brexit.

Do you reckon there will be interest for the residential / commercial buildings segment going forward despite the bumpy exit? Why?

Yes. Right now, Brexit has increased the perception of risk in the London market; as a result, prices and currency have fallen – for many investors, this is when the decision to buy becomes more compelling.

What is Knight Frank’s medium and long-term view of the British property market, both in terms of commercial/ residential segments?

Short-term uncertainty, longer-term positive – the UK remains a significant global economy in or out of the EU.

– Malaysia Property News

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