City & Country: Malaysians turning to properties in the UK

Since the global financial crisis, a number of UK developers have begun to market their properties in Malaysia. They appoint local realtors and hold exhibitions, giving Malaysians first dibs on the properties, even before they are released in the UK itself.

Henry Butcher Marketing Sdn Bhd, for example, has brought as many as 20 projects here since March last year and represents a number of UK firms, including Berkley Group, United House Group Ltd, Ballymore Group, Bellway Homes, and European Land.

COO Tang Chee Meng says developers found Malaysia a lucrative market when they expanded in Asia beyond their traditional markets in Hong Kong and Singapore.

“While these markets continue to be strong, the good response from Malaysian buyers keeps the offerings from the UK coming,” Tang says.

The weakening of the pound sterling against the ringgit has attracted Malaysian buyers because UK property has become more affordable.

“London projects have been marketed here, but never in a major way, mainly because the pound has been strong against the ringgit. However, it all changed with the weakening of the pound sterling over the last two years,” says Tang.

Property prices in London dropped 15% to 20% during the financial crisis last year. “Before 2008, London property prices had been shooting up like crazy, making it unaffordable for most Malaysians. After the fall of Lehman Brothers in October 2008, property prices in prime London areas dropped about 15% while those in the surburbs dropped 20%,” Tang says.

Why UK properties?

There has been “healthy interest” in London properties with a good spread of appetite for both prime properties in central London and those in the suburbs, especially Zone 2, where nearby transport links provide easy access to the city.

“For example, the City Walk apartments were completely sold even before they were marketed in London,” says Tang.

Developed by Berkeley Homes, all 52 flats were sold to investors from Malaysia, Singapore and Hong Kong last July. Prices ranged from £169,950 to £360,000.

Its popularity is attributed to its location opposite a new Underground station, and it is well within reach of the high street shops, restaurants and cafés.
Henry Butcher recently marketed 69 units of the Curtiss Apartments  to Malaysians, with encouraging results. Photo by Patrick Goh
Henry Butcher also recently marketed 69 units of the Curtiss Apartments in Beaufort Park, North London, to Malaysian investors with encouraging results.

Tang explains that the take-up rate differs from project to project, depending on location, accessibility and facilities provided.

Most Malaysian investors comprise the upper-middle class, with 60% buying for investment and 40% for their children studying in the UK.

“They are really looking at rentability as well as potential appreciation in capital and currency,” Tang adds.

What makes London so attractive?

“First, London is a truly international city. As they say, ‘All roads lead to London.’ Secondly, the properties are freely transferable. If you buy the property today, you can sell it tomorrow to an Englishman, South American or African. There are no restrictions, unlike in some countries,” says Tang.

“Thirdly, bank loans are easily procured. Subject to certain qualifications, there is no capital gains tax for foreigners to buy and sell properties. It is only taxable for residents or domicile buyers. Fourthly, there is a shortage of accommodation in London at the moment.

“Because of the financial crisis, a lot of developers could not complete their projects, so there is an undersupply situation. Therefore, the secondary market is rather easy.”

He adds that the planning laws in London are very strict as they emphasise conservation and heritage.
“The laws are transparent and stable. Policies do not change overnight and investors view these as some of the merits of investing in London,” he says.

Things to look out for before buying

“It is important to seek proper advice before investing. Go for people who have authority in the sector, who can link you with good lawyers, tax consultants and other parties,” says Tang.

“For example, Henry Butcher has built and established relationships with certain key people there. Therefore, you don’t have to travel to London to source your own people. This will save you a lot of hassle. It is one of the advantages of having a representative here in Malaysia.”

Tang also advises investors to buy new property because of certain perks.

“Whenever there is a new project, buyers only need to pay 10% to 15% of the price at the pre-completion stage. The balance is paid usually one year after the project is completed,” he says.

There are also certain hidden costs to look out for. There is the ground rent (£150 to £600 per year depending on the project), council tax, service charge, legal fees and disbursement, stamp duty and income tax.

“However, the council tax is payable only by the resident of the unit while expenses associated with the unit can be deductible from the income tax. And of course, capital gains tax is not applicable to the owner,” he says.

Hot addresses
Tang reveals certain “hot” addresses, such as Battersea along the River Thames and Woodberry Park, both of which have been undergoing regeneration.

“Battersea is a hot spot as the US Embassy will be moving there from Mayfair. It is also the only site remaining [on the river] that has not been regenerated. Woodberry Park has 40 acres of water and 112 acres of parkland next to the project,” says Tang.

Henry Butcher is representing Berkeley Homes Ltd to market the Ultima II apartments at the Chelsea Bridge Wharf in Battersea Park. Some 33 units will be up for sale from £445,000.

One-bedroom units start from 433 sq ft while penthouses are from 1,403 sq ft. The project is due to be completed early next year.

“Other places to look out for are Imperial Wharf and the Fulham Chelsea area in SW6. Basically, you can’t go wrong with projects in the prime areas of the city,” says Tang.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 799, Mar 29-Apr 4, 2010.

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