By Daven Wu
IT'S hardly news that while the major Western world currencies have been reeling from the battering they've been dealt over the past few years, the Singapore dollar and its Asian counterparts have been strengthening.
Three years ago, for instance, it was trading at around S$3.20 against the pound sterling. These days, it hovers around the S$2 mark.
For Singaporeans, this hefty 27 per cent increase in the purchasing power of their dollar has been a boon, and not just for holidays and retail expeditions to Europe and North America.
Because the bigger news is just where savvy Singaporean and other Asian investors have been parking this windfall - property. Overseas property, to be precise.
Matthew Rollason, managing director of Swiss-based property agents Alpine Homes, says that Asia's currency growth has opened European property to a wider audience. 'For the right developments, and developers, the Asian market is now an integral part of their business plan,' he says, adding that essentially, Asians want quality and a good location, and they see overseas property as a strong investment. 'The first two elements are of particular importance to those buyers who are buying for their own use.'
Similarly, Harry Handelsman, the CEO of the London-based luxury property developer Manhattan Loft Corporation has noticed 'a particular increase in Asian buyers buying apartments for their children at university in London' especially in tony areas like Chelsea and Fitzrovia.
James Knowles, vice-president of sales and marketing for Thai property developer Minor International agrees. One of his company's projects - the St Regis Bangkok Residences in the Thai capital is targeting 65 per cent of its sales at foreigners. 'There is certainly a resurgence of new interest from most of the Asian markets due to their strong economies and stock markets. We have noticed in particular a strong increase in enquiries and purchasers from Singapore, Hong Kong, Indonesia, Malaysia and Thailand.'
London, in particular, is proving to be a magnet. 'Now is the best time to buy into prime London properties,' says Julian Sedgwick, director of Savills Asia Pacific, adding that the combination of capital appreciation upside based on currency play and the current low borrowing and savings interest rates creates a potentially handsome overall capital appreciation. That said, Mr Sedgwick cautions that 'buyers should view property investment as a hedge against inflation and go in with a mid- to long-term investment time frame in mind.'
Not that any of it comes cheaply. The Guardian newspaper recently reported that 70 per cent of London properties above ?10 million (S$20.5 million) are bought by investors from the Middle East and the former Soviet Union, but increasingly China, India and elsewhere in Asia. The new 86-apartment One Hyde Park development across the road from Harrod's is selling at ?6,000 per square foot. It's already 60 per cent sold.
The comparative maths is certainly instructive. 'If a Singaporean buyer was considering a purchase in 2007 at ?300,000, he would be paying S$900,000,' says James Talbot, Director of Savills UK and Europe. 'Today, the same property price is only S$600,000.'
And it's precisely on the strength of such numbers that increasing numbers of European property developers are including the Asian circuit in their property roadshows.
Earlier this month, for instance, Brookfield Europe launched its London development Strata with a tour that took in Singapore, Hong Kong and Shanghai. Its promotional material baldly referred to 'elite', 'well-heeled' and 'discerning Asian buyers'. Meanwhile, the international sales agents for Manhattan Loft Corporation travel to Singapore, Hong Kong and Kuala Lumpur to meet directly with agents and potential purchasers.
Voon Wong, a London-based Singaporean architect, says that 'the high end of the London property market is still buoyant, and due to the relative decline of the pound sterling as a currency, it is proving to be a good time for overseas investors, especially Singaporeans, to buy.'
He should know. His design studio has done a significant amount of work renovating homes for what he describes as an increasingly discerning Asian investor. Indeed, 40 per cent of work is on London homes for clients from Singapore, Hong Kong and Kuala Lumpur. 'The best way to profit from the market currently is to invest in a property with the potential for added value, through good renovation design and high quality workmanship. And if the property is a heritage listed property, the client can benefit from lower VAT rates for the work as well.'
In recent years, Wong has renovated a 1950s house for its Pakistani private developers who wanted to update the 1980s interior for resale; a 19th century apartment for Taiwanese developers looking for the rental market; and an apartment for a Singaporean resident from the Philippines who wanted to rent it out on short three to six month rentals.
Of course, the bother of renovating is not everyone's cup of tea, which explains the attraction of buying a new property. And it's no surprise that property developers have been quick to spot the trend and they've been equally quick to respond with marketing platforms designed to lure cash-rich overseas Asian investors.
A year ago, Adrian Teng, an executive at a global conglomerate, bought a two-bedroom flat in a new development in London's Canary Wharf. The pay-off, he says, is asset appreciation plus a rental yield of between 8 and 10 per cent per annum. What's more, 'as UK residents, we could take a 70 per cent mortgage from our bank and as we already had plans to move back to Asia, it made sense to buy as a long-term investment as it could easily be let out'.
Across the English Channel, Mer de Glace is an ambitious project that combines a 25 suite hotel, spa and 70 private apartments in the Swiss ski resort of Nendaz. With prices half that of its ritzy better-known neighbour Verbier, the town is banking that foreign investors will take to its less crowded ski slopes and more affordable kick-off investment point. Mer de Grace, in particular, is offering prices that are approximately 20 per cent below other similar projects in Nendaz.
The Asian market figures strongly in Mer de Grace's sales and marketing programme. Savills, the agent overseeing sales, says that this is a rare opportunity for Asians to buy a strong investment project in a stable country with a stable currency. Mr Talbot notes that Mer de Grace's prime location 'represents an excellent opportunity for Singaporeans to spread their investments across a wide portfolio, while enjoying stable returns'.
Read a little more carefully into the PR pitch, however, and it's clear that property developers are only just cottoning onto the fact that it's not necessarily enough to be bullish on the marketing campaign. Increasingly, Asian property investors are becoming more demanding about the hardware in the properties they buy. Most tellingly, Manhattan Loft Corporation retains a fengshui (geomancy) master to consult on all its projects.
Says Mr Rollason: 'As Asians are proving to be a strong consistent market, we are expecting to see some alterations to the way the properties are designed in the UK, such as enclosed kitchens.'
Wong tells a similar tale. 'Singaporean clients tend to be interested in clean contemporary design, and they don't really look for anything which could be construed as ostentatious.'
That said, many investors still prefer to buy off-plan without once seeing what they're buying. Mr Handelsman, in particular, notes that 'Asian investors are sophisticated and experienced in their purchases of residential property, particularly off-plan.'
T Ho says that lots of overseas properties are shown and presented in Singapore. He bought his two-bedroom apartment in Melbourne's trendy Southbank off-plan primarily for its returns and positive gearing. The riskiness of such a move seems to be balanced out by a healthy dose of pragmatism, Asian-style. 'I bought it on faith. Because of its location and river and city views, I thought it would be a good investment.'
Mr Ho's approach may strike some as an overly simplistic philosophy, but if the numbers are anything to go by, there's every reason to suspect that in a financial world that's still uncomfortably volatile, it's also a canny long term strategy.