Straits Times: Fri, May 25
LONDON - When the developer of Embassy Gardens, a new residential block in south central London, launched sales this month, it started pitching first to buyers 10,000km away - in Kuala Lumpur. The launch in Malaysia was swiftly followed by others in Hong Kong and Singapore.
So far, South-east Asian investors have snapped up over £100 million (S$201 million) worth of units on offer - or about 160 of the development's 350 units, said the project's property agent.
'It's been Asia first for a while,' said Ms Jazmine Goh, business development manager at Henry Butcher Malaysia. 'Now they (wealthy Asians) can show that they, too, can afford to own property in London.'
It was the same with the Berkeley Group's Bridgeman House on Kensington High Street, a 95-unit condominium. It will have its international launch today at Singapore's St Regis Hotel, ahead of its launch in Britain.
Since the global financial crisis hit in 2008, developers of London property - long an international market - have increasingly been looking East for buyers. Way east.
Between 2007 and last year, about 43 per cent of buyers of new prime London property costing £1 million and above came from Asia, according to property broker Savills.
Estate agent Knight Frank's Wealth Report 2012 ranks investors from China, Hong Kong and Singapore among the top 10 groups who buy prime second homes around the world. Indians, Malaysians and Indonesians are fast catching up.
'For many wealthy Asians whose portfolios are already skewed heavily towards Asia, London represents an opportunity to diversify their investment,' said Mr Liam Bailey, head of residential research at Knight Frank.
While many Asians buy for investment, others who have studied in Britain buy a future home for their children who may take the same path.
Government intervention to reduce speculation in home markets has also encouraged more bullish investors from the likes of Shanghai, Singapore and Hong Kong to look abroad.
Foreign buyers have kept the London property market buoyant even amid a recession. Prime residential real estate rose 12.1 per cent last year in London, one of only two European cities (the other being Zurich) to notch price increases, said Knight Frank.
'London's prime housing market is seemingly powered by capital flight from the whole globe,' said the company.
One Malaysian banker bought a three-bedroom flat in Bayswater for £1 million in 2009, when prices were about 20 per cent off their peak.
'Like many of my friends who have bought property in London, I studied in Britain and I'm familiar with the London neighbourhoods,' said the banker, who asked not to be named. 'It made sense to invest there when I wanted to diversify.'
The price of his flat, which is rented out, has appreciated 50 per cent in the last three years.
As in any property market, location is key. Bayswater and the neighbouring Queensway in West London are popular with Asians, not least because that is where the hugely popular Four Seasons roast duck and Khan's briyani are to be found. They are also close to the shopping havens of Westfield and Bond Street.
'It's in Zone 1, there are no high-rises and it's near Hyde Park,' added the banker.
London has strict planning regulations to preserve its architectural heritage, green spaces and protected views of places such as St Paul's Cathedral and Westminster Palace.
This means a dearth of new high-rise developments in established, Georgian-terraced neighbourhoods like Knightsbridge, Chelsea and Kensington.
Hence, Asian buyers who prefer more affordable real estate with facilities such as a gym, pool and concierge are also flocking to projects farther afield like Embassy Gardens, which is close to the Vauxhall underground train stop in south central London.
The building has units ranging from just under £400,000 for a studio flat to over £1 million for a three-bedroom apartment.
The trend is expanding the definition of prime central London, with big increases in £1 million- plus transactions at the fringes of central London, Maida Vale in the north-west and Fulham in the south-west, said Savills Research's director Lucian Cook.
One Asian investor based in Singapore has ventured farther south to Richmond, an upper- class area where you are more likely to spot celebrities like Jerry Hall in a specialist cheese shop than an Asian face on its high street. This may soon change.
'We chose Richmond because I wanted my daughter to live in a real home in the suburbs with a park behind and a river running past,' said the investor.
The three-bedroom house in a gated compound on the edge of Richmond Park has appreciated 60 per cent since she bought it in 2006 for under £2 million.
With lending rates low in many Asian countries, some are refinancing their local properties and buying in London, said Ms Goh.
Even a rise in duty on British residential properties costing over £2 million in March, from 5 per cent to 7 per cent, seems to have had little impact on the prime property market, Mr Bailey noted.
BID TO DIVERSIFY PORTFOLIO
For many wealthy Asians whose portfolios are already skewed heavily towards Asia, London represents an opportunity to diversify their investment.
- Mr Liam Bailey, head of residential research at Knight FrankSource: The Straits Times