The recent changes to Singapore’s property investment climate have had a profound impact on the mood of those who would hitherto have been busily building up their portfolios in the city-state.
Of course, some would say it is entirely understandable that the government would act after the Urban Redevelopment Authority revealed that residential property price inflation reached 9.1 per cent over the past 12 months. Like so many other major global cities, Singapore has seen sustained market inflation and there was bound to come a time when action was needed to stop ordinary people being priced out.
Even so, the measures taken were stern; the introduction of a five per cent increase to additional buyers’ stamp duty (ABSD) was intended to deter purchasing of second and third homes, while the five per cent cut in the loan-to-value ratio limits for all home purchases has made borrowing to buy harder.
Developers have also been hit, having seen their remittable ABSD charge when acquiring private residential land rise from 15 per cent to 25 per cent.
All that may significantly dampen the market in Singapore. But while that could be good news for some, investors will naturally start to look beyond the island at where the good investments may lie.
In this feature, Experience Invest looks at how investors based in Singapore can achieve returns from UK property.
The UK is certainly one enticing prospect. Its economy is still growing, despite some gloomy forecasts about Brexit, and while there may be consequences once the UK leaves the EU, particularly in the event of a ‘no-deal’ scenario, the fact is that Britain will be looking to spread its wings when it no longer has such a close economic relationship with 27 other countries.
Indeed, the British government has been encouraging Asian property investment for years, be it from Singapore, China and Hong Kong, Kuwait, the UAE, Malaysia or India. Major projects being developed – or already finished – using Asian money include Battersea Power Station and the Shard in London, and the Beorma Tower in Birmingham.
Opportunities in the north-west
Singaporean investors turning their attention to the UK at the moment will find that there are just as many opportunities to be seized in northern England as there are in London and the south. This is particularly true in the north-west, the region that is home to two of the UK’s most popular cities and fastest-growing property markets: Manchester and Liverpool.
The central Manchester and Salford area is one of the biggest property hotspots in Britain right now. While general residential prices are rising in the city as its population grows, investors are finding fast-growing markets, not least in the build-to-rent sector.
However, buyers have much to gain from Liverpool as well, which boasts some key advantages over its north-western neighbour, such as lower average house prices and greater scope for capital growth.
The city is currently home to a number of exciting developments offering a lot of potential for Singaporean investors, such as the Aura Student project in the Knowledge Quarter and Infinity Waters, a residential apartment complex close to the city centre and business district.
With its growing economy and expanding student population, Liverpool offers the reliable renter demand needed to ensure buyers receive regular returns on their investment.
Other regional variations
Recent regional trends across the UK have provided plenty of evidence of property investors in London feeling less confident than their counterparts in other locations.
According to the latest Paragon Bank figures, landlords in the Midlands are the most likely to be growing their portfolios, with those in the East Midlands – places like Nottingham, Derby and Leicester – currently enjoying average yields of 6.7 per cent. By contrast, a sixth of central London landlords report that there is currently downward pressure on rents.
London’s situation may be partly due to Brexit fears and also a more general market correction. That does not mean Singaporean investors should necessarily look away from the capital, but any investment there should be focused on the long term and alternatives in other parts of Britain are certainly worth considering.
For those who are focused on London and surrounding areas, one common strategy is to buy in popular commuter hotspots such as Luton. These sorts of towns offer the benefits of lower average property prices (compared to the capital) and reliable housing demand from workers who travel into the city.
Specific investments currently available in Luton include Imperial Square from Experience Invest, an off-plan residential development offering a 10 per cent discount for early investors.
With such severe constraints on property investment having been introduced in Singapore recently, investors from the Asian city-state have some powerful incentives to look overseas and consider the opportunities on offer in the UK.
With several cities witnessing consistent economic growth, low unemployment and a strong private rental market, there is no doubt the country offers some excellent prospects for savvy investors.
If you are based in Singapore and would like to speak to a professional consultant about investing in UK property, simply contact Experience Invest today.