More Asians buying luxury homes in the West

More Asians buying luxury homes in the West

Capital flight from emerging economies to safe haven destinations have caused prime property values to shoot up in the West. Prime property values in London for instance, are now around 3,000 pounds per square foot – levels seen before the 2008 financial crisis.

And the sentiment on London’s properties hardly moved even as the government raised stamp duties on luxury homes.

Fancy living in the same neighbourhood as Lady Gaga? Some investors in Hong Kong have shelled out more than 8 million pounds for that privilege.

They have snapped up apartment units in a new development called Fitzroy Place, located in London’s Fitzrovia district.

According to its developer Exemplar Properties, the price range for a unit at Fitzroy Place is between 605,000 pounds and 8.5 million pounds.

The mixed-use development comprises 237 private apartments and 200,000 sq ft of prime office space. Exemplar said UK buyers will probably take up 50 per cent of units at Fitzroy Place, followed by East Asians, with 15 to 20 per cent.

Private bankers said Asia’s super-rich is buying more luxury homes in the West, as they face punitive property taxes in their own backyards.

According to a report, that has driven prime property values up 12 per cent in London over the last year, while prices fell 3.4 per cent in Shanghai and close to five per cent in Singapore.

Tim Bowring, Managing Director and Regional Head of Global Real Estate Investments at Citi Private Bank, said: “From Asian clients we’ve seen over the last 18 months an increase in investor demand in the UK for both commercial and residential markets… They’re buying for capital growth and as a safe haven.”

The pound is trading at historically low levels to Asian currencies like the Singapore dollar, and that has also boosted buying from investors looking for a bargain.

Although the UK authorities increased stamp duty by two per cent for properties above the two million pound mark, analysts said prices of central London properties will remain steady because of the tight supply in London.

They added that investors are also looking at buying distressed commercial properties in London and Europe on the cheap.

Source : Channel NewsAsia – 10 May 2012