Berkeley Group Holdings Plc (BKG), the U.K.’s second-largest homebuilder by market value, is benefiting from Singapore’s efforts to cool its property market as new restrictions and a weak pound attract investors to London.
The island nation is the biggest overseas buyer of homes constructed by Berkeley, which sells 40 percent of its properties to people living outside the U.K., Managing Director Rob Perrins said in an interview in Singapore yesterday. Hong Kong and Malaysia are the next-biggest markets for the company based near the U.K. capital.
“People like property, it’s bricks and mortar, especially at the moment with the Singapore dollar so strong against the pound,” Perrins said. That’s “obviously attracting investors into London as well,” he said.
Singaporeans are looking abroad for investments as the local currency rose to a record against the pound, making home purchases cheaper, and as they face government measures at home to rein in property prices that have reached an all-time high. Berkeley is opening its second office in Asia in Singapore’s central business district of Marina Bay Financial Centre to cater to increasing demand, Perrins said.
London’s housing market is outperforming the rest of the U.K. and in recent months has seen a “marked pick-up” in momentum, according to the Royal Institution of Chartered Surveyors. An index of U.K. house prices rose to the highest in 2 1/2 years in December as measures to boost credit made property brokers more optimistic, London-based RICS said in January.
Berkeley, which has offices in Hong Kong and Dubai, is seeking to attract more international buyers, who tend to make purchases earlier in the development process than U.K. customers, Perrins said. About 70 percent of overseas buyers purchase a property in London as an investment, while the rest seek a second home or a residence for their children studying there, he said.
“Singapore investors are very savvy,” Perrins said. “A lot of Singaporeans know London better than many Londoners do. They do a lot of research before they buy.”
After U.K. buyers, Singaporeans bought more new residential properties in central London than any other nationality last year, accounting for 23 percent of transactions, broker Knight Frank LLP said in a January report.
Singapore Prime Minister Lee Hsien Loong is trying to curb property-market speculation. A 1,636-square-foot (152-square- meter) condominium in the Marina Bay financial district sold for S$4.4 million ($3.6 million) in November, government figures show. A unit about the same size in London’s Canary Wharf was priced at 2.3 million pounds ($3.5 million), broker Foxtons Ltd. said.
Berkeley’s first-half profit rose 45 percent as the company sold more homes with wider margins, the Cobham, England-based company said on Dec. 7. Revenue rose 69 percent to 686 million pounds. It sold 1,927 homes in the first half of 2012 compared with 1,506 a year earlier at an average price of 335,000 pounds. That compares with an average selling price of 254,000 pounds in the first six months of the previous fiscal year.
The Singapore dollar strengthened on Feb. 25 against the British pound to the highest on record dating back to 1981, according to data compiled by Bloomberg. The dollar traded at S$1.8773 per pound today, little changed from yesterday when it weakened 0.2 percent.
Currency fluctuations are helping drive sales of apartments at Battersea Power Station, according to Battersea Power Station Development Co.
“The currency is huge,” Rob Tincknell, the company’s chief executive officer, said in an interview at the property. “Look at the last few weeks, they’ve made a fortune.”
More than half of development’s apartments have been sold in overseas markets including Singapore, Malaysia and Hong Kong, Tincknell said. Around 30 of the 860 apartments making up the project’s first phase are unsold, he said.
Singapore earlier this week announced plans to raise property levies for luxury homeowners and increase duties on investment properties that are vacant or being rented out.
Those steps came after officials introduced a seventh round of real-estate cooling measures in January, which included limits on how much buyers seeking a second mortgage can borrow relative to the value of their properties. People applying for a second or subsequent home loan will also have to pay a 25 percent cash down payment, from 10 percent previously.
“We landed Singapore the day after the measures were introduced,” Tincknell said. “It was the talk of town. They are trying to slow down that market considerably.”
The median price per square meter for condominiums jumped to S$11,056 in the fourth quarter, the highest in Urban Redevelopment Authority data dating back to 1998.
Berkeley has invested about 1 billion pounds in the U.K. property market since 2007 and now builds about 15 percent of all London homes, he said.
“Confidence is returning,” Perrins said. “People like property as they see it as an inflation hedge.”