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S'pore investors flock to overseas properties

Canada, Australia, NZ and London projects see keen interest
Monday, October 28, 2013 - 06:00

[SINGAPORE] Singaporean buyers are heading to overseas property markets in droves, hitting familiar favourites such as London and Australia, but also new spots such as Canada and New Zealand.

Indeed, Jones Lang LaSalle (JLL) has seen a spike of about 60 per cent in interest in London properties in the first five months of this year.

This, said the consultancy, is due to the launch of more iconic and well-located Zone 1 projects such as Battersea Power Station, 190 Strand, One Blackfriars, and Baltimore Tower.

According to JLL, over 50 units per month were snapped up by Singaporeans in the first five months of this year.

"Singapore investors are getting increasingly confident in the London residential market as they are selling down quickly and able to lock in their profits, so we are seeing more repeat buyers who are willing to return to the market and invest in more of such properties," said Doris Tan, head of residential international projects at Jones Lang LaSalle Singapore.

Specifically, the consultancy has seen the number of Singaporeans who already own three or more UK properties increase by some 2.8 percentage points, from 6.4 per cent in 2012 to 9.2 per cent in 2013.

According to Mary Timlin, sales and marketing director at Redrow Homes London, a major attraction for Asian investors lies in their being able to finance their purchases in a foreign currency against the weakening pound.

"Meanwhile, overseas buyers who buy London's property are not liable for capital gains tax on the capital growth and some of them like to secure properties today for their children's further education in London," she said.

Even as investors flock to familiar favourites, new spots such as New Zealand are also receiving their share of interested buyers.

According to Rob Young, sales director for Conrad Properties Group, a real estate development and investment company, the New Zealand property market has traditionally seen keen interest from mainland Chinese.

Indeed, the two projects rolled out by the developer this year - Urba Residences and Queens Residences - were well received by both New Zealanders and Asian investors.

The 143-unit Urba Residences, which is located at 5 Howe Street, Auckland, was 85 per cent sold out within 12 weeks. Of this, 12 per cent of the buyers were offshore investors - half from Australia and the other half from South-east Asia, said Mr Young.

"Put simply, the local demand is extremely strong, as well as interest from South-east Asia and Mainland China," he said.

Queens Residences, which offers 273 residential units in the heart of Auckland's central business district, was launched in early August and met with similar success.

New Zealand attracts investors due to its transparent and stable business environment and positive outlook with consistent economic growth, strong currency, and population growth, noted Mr Young.

Other factors, such as the country's transparent real estate sector, favourable long-term economic indicators, lack of land tax and stamp or conveyance duties, add to its allure.

The fact that the property market is at the bottom of its property cycle helps too.

"According to the Real Estate Institute of New Zealand, the Auckland median dwelling price has increased a remarkable 103 per cent over the last 10 years, and is predicted to continue. We have waited some four years for the New Zealand property market to strengthen," said Mr Young.

Indeed, Singapore has now replaced Japan as the fourth largest foreign investor in New Zealand, according to Statistics New Zealand, which show that total foreign direct investment from South-east Asia hit NZ$4.4 billion (S$4.5 billion) in the first three months of 2013, up from NZ$2.8 billion a year before.

Canada too has seen a surge in interest from Asian investors.

According to Virata Gamany, director of Vision International Properties, a breakdown of buyers of some of its recent projects showed that roughly 35 per cent of the units were bought by Asian investors.

Its latest project, Sage Gardens condominium in St Alberta for instance, saw all the units set aside for Asian investors snapped up.

During its Asian tour - for which 25 units of its Phase 1 launch was reserved - the developer sold 17 units in Malaysia, and 15 units in Singapore. As a result, it had to cancel the planned preview for Hong Kong which was scheduled for the following weekend.

On the broader investment front, Singaporean investors have returned to the Australian property market with a vengeance, snapping up some US$585 million worth of real estate - comprising all commercial property transactions above US$10 million - between January and September this year, according to CBRE data.

This is a 105 per cent increase compared with the same period last year, noted Petra Blazkova, head of research for Singapore and South-east Asia at CBRE

"Since the Global Financial Crisis in 2009, the liquidity has returned to the market and the first wave of strong appetite for Australian real estate from Sngaporeans appeared in 2011," she added.

Of the different commercial assets, investors have flocked to the office class (63 per cent of overall investment), followed by retail (22 per cent), and industrial (9 per cent).

Perhaps unsurprisingly, key cities such as Sydney (40 per cent of overall investment) and Perth (27 per cent) continued to draw the most investor dollars, followed by Melbourne (18 per cent) and Brisbane (12 per cent).

"Strong investment activity is likely to continue on its trajectory in Q4 2013 and beyond as some large deals are in the pipeline. That said, the weight of capital and the race for core assets has been pushing down yields. As a result we may see some of the interest shifting to the suburban markets and Grade B assets but Sydney and Melbourne still remain the key target," said Reid Mackay, CBRE executive director.