Singapore’s cooling measures, introduced to prevent overheating in the local property market, have been successful in reducing momentum and have encouraged property investors to look overseas in the search for yield.
According to data from JLL, 88 percent of units sold between 2012 and 2015 were for UK properties. Japan is a distant second at 10 percent with the remaining 12 per cent comprising of projects from markets such as Australia, USA, Thailand and New Zealand.
Over the years, Singaporean investors have shown an insatiable appetite for investment into London, accounting for 23 percent of all purchases of newly built Central London property in 2013, second only to British buyers who accounted for 27 percent. The primary drivers are capital preservation, an expanding rental sector, strong capital growth prospects and London’s standing as a global financial centre and education hub with a reliable legal system and transparent track record. In essence, London has always provided investors with a degree of security with its growing list of safe-haven credentials.
Shift in buyer preference
There has, however, been a noticeable shift in buyer preferences around asset fundamentals and price point with more focus on projects outside the traditionally popular prime central London locations.
“We are seeing a shift in appetite with purchasers now seeking long-term growth prospects in the medium to lower end of the price spectrum and our expectation is that demand in the sub-£1 million market will remain buoyant throughout 2016, albeit with an increasing note of caution,” says Adam Challis, Head of Residential research at JLL UK
“The attributes that underpin demand for London residential property remain sound and it is expected that buyers will continue to identify value opportunities in Zone 2 and beyond during the first-half of 2016. As a result, new build pricing for these properties is expect to remain broadly flat, provided that developers adjust expectations to suit this new market condition.”
Despite the uncertain political and economic environment, there are still reasons for optimism in the London residential property market. Compared to the world’s other most prominent cities, London is less known for its towering skyscrapers. But that is set to change and we are likely to see a battle in the sky, with competition between developers as to who can build the tallest London landmark.
Despite the particularly sensitive outlook for the Prime Central London market, the shift in buyer preferences towards Greater London locations provides an optimistic forecast. For the Outer London housing markets, which are expected to see a superior price growth in comparison to higher value and more price sensitive central locations, a 5.5 percent rise is expected in 2016.
All in all, 2016 should be a year of both consolidation and progression for the UK in both political and economic terms. Events in China and other emerging economies, oil prices, the continued slump in the local property market will all continue to play their own part in the continuation of the UK’s safe haven credentials.
JLL's Singapore team