Singaporeans are snapping up overseas properties, especially those in London.
Analysts said the demand for overseas property investments is mainly boosted by a strong Singapore dollar.
And now, with increasing volatility in the equity markets, more investors here are likely to park their funds in high-yielding overseas properties.
According to a report by Knight Frank, Singaporeans tied with the French to be fourth-largest group of foreign buyers of prime central London properties.
That is based on transactions, involving properties that cost more than two million pounds, for the 12 months ended February 2011.
Analysts said the demand is driven by a combination of factors, such as the anti-speculative stamp duty of 16 per cent imposed on the local market, the strong Singapore dollar, and higher yields from overseas properties.
International Properties associate director Stephen Ho said: “The currency is approximately 1.996 for today (Wednesday), whereas in 2006, it was actually 3.1 (Singapore) dollars to the pound.
“So immediately, anybody who buys now, is going to benefit.
At 5.3 per cent, yields of London properties also surpass the yields of local properties, which average three per cent.
These investment properties are also looking attractive due to the recent stock market volatility.
According to Knight Frank, prices in prime central London rose 10 per cent in July, while prices in the wider UK market have fallen one per cent.
KOP Properties CEO Leny Suparman said: “There has never been a reduction in prices in central London, especially in the luxury segment.
“So in fact, the prices have been going up steadily and especially recently. I think the last six months because of economic, political instability in various countries has led to a surge in prices of luxury properties in central London.”
But some analysts said the recent riots could take some of the shine off London’s property sector.
Still, Colliers said London was the top destination for Singapore real estate investors, accounting for 97 per cent of all its overseas transactions in 2010.
Sydney accounted for the remaining three per cent.
Source : Channel NewsAsia – 10 Aug 2011