Sipping cocktails on the roof terrace of Singapore’s five-star Fullerton Bay Hotel, well-heeled couples gazing at the glittering Marina Bay Sands Casino are contemplating a rather more regal landscape.

“Discover your own royal view here,” runs the marketing blurb for the Nova Building, a development of luxury apartments near Buckingham Palace Gardens in central London. With prices starting at £600,000 for a one-bedroom flat, UK-based developer Land Securities is one of many to have held a “cocktail preview” for wealthy investors in the city-state, showcasing London properties to the “Singapore Bling”.

Nearly three-quarters of new-build homes in prime central London were bought by non-UK buyers in 2012, according to data from estate agent Knight Frank, and more than one in six foreign buyers in central London came from Asia.

That demand has helped push up the average London house price by more than 11 per cent in a year, leading economists to warn of a price bubble, and politicians to decry the lack of affordable homes.

Judging by the glossy marketing fliers that arrive in mailboxes in Singapore’s high-rise apartment blocks, where many prospective buyers live, neither issue is high on the agenda.

“Of course, there’s some concern that the bubble might burst,” says Donald Han, managing director at Chesterton Singapore, “but at the end of the day there is huge liquidity out there. It’s easy to get out of the market and you have a deep pool of buyers waiting on the sidelines.”

Buyers are not just drawn from the ranks of the super-rich; many are middle-class professionals. When he is not running his medical practice in Singapore, Mark Yap, a 43-year-old doctor, spends time researching the London property market.

“London’s a cosmopolitan place – just like New York. I find the system for buying there excellent too. The conveyancing lawyers all correspond by email and are very prompt in their replies,” he explains.

Thousands of Singaporeans have piled into London’s property market in the past three years, and investors are not just buying London property – they are building it. Commercial developers from the city-state accounted for almost 4 per cent of commercial investments in London, according to Knight Frank. They invested £3.1bn into 21 projects in London last year, three times the number of projects compared with the year before, involving more than 10 times the level of investment.

Boris Johnson, the London mayor, recently touted a 40-acre project by Singapore-listed Oxley Holdings at Royal Wharf, in the city’s eastern docklands area, as an example of the “colossal appetite” of developers in his city.

Dr Yap’s first purchase was a two-bed flat in Chelsea for £600,000 in 2011. He recently snapped up a one-bed unit in Battersea Power Station, a huge regeneration project on the river Thames, which also highlights the flood of Asian money into London. Its backers are three Malaysian companies, including Sime Darby, the world’s largest palm-oil producer.

Like other Singaporeans, Dr Yap was propelled to London because the local property investment market has become prohibitively expensive, thanks to an influx of “hot” money from mainland China.

ANZ, the Australia-based bank, says the average price for the condominiums that bristle the Singapore skyline has grown 47 per cent since 2009. Rental yields are less than 3 per cent, but London offers 4 per cent or more. Another factor is the relative strength of the Singapore dollar against the pound.

Conveniently, Singapore’s banks offer mortgages for locals wanting to purchase in London – in pounds or Singapore dollars.

Yet some analysts warn that parts of London’s housing market face a potential oversupply of new properties in the next five years as developers rush to cash in on the tide of overseas investment.

The most expensive properties, known as “prime” and priced at above £2,000 a square foot, will remain in short supply, but a large number of new homes in more peripheral areas are being built in the slightly cheaper price bracket, from £1,000 a square foot.

These include the Nine Elms neighbourhood on the south bank of the Thames, where 16,000 new homes will be created in the coming years. The level of supply leads estate agents to fear prices could drop back.

“Building new developments away from Mayfair and Park Lane may be easier in Battersea and east of the City but this doesn’t necessarily make them a better investment,” says Henry Pryor, a UK property-buying consultant who specialises in high-end homes. “The more hype that is required to persuade the long-distance buyer, the more wary they should be.”

… Developers and agents put on a show to attract the big money

Anyone picking up a copy of Singapore’s Straits Times newspaper could hardly fail to notice the advertisements – sometimes stretching to a full page – from London-based developers touting their latest developments to Asia’s wealthy investors, writes Jeremy Grant in Singapore.

These, and glossy marketing fliers stuffed into mailboxes, have been the stock-in-trade of developers and agents trying to lure investors from Singapore for many years.

The typical formula is an invitation to an evening event, involving presentations, sales pitches and free cocktails.

Some developers have gone as far as to put down roots in the Asian city state, including London-listed Berkeley Group. It opened an office exactly a year ago to tap into demand further afield in Southeast Asia.

But there are signs that the appetite for these glitzy events is diminishing.

Mike Bickerton, head of new homes in the global residential department at agents DTZ, says the Singapore government has recently slapped restrictions on the amount that people can borrow to buy property – part of price-cooling measures locally – which has had a dampening effect.

‘The profile of the buyers has changed, we used to see the same faces turning up at every exhibit and they’d buy a property once every few months. Buyers are now judged on their incomes,’ he says.

Others say that the economic recovery under way in London means buyers are not so hard to find over there, so there is less incentive for developers to take long flights to Asia in search of business.

“A lot of developers are saying the market’s so strong in London right now, we don’t need to go to Asia,” says Richard Levene, sales director for international properties in the Southeast Asia business at Colliers International.

It is also expensive – a typical roadshow to Singapore, Hong Kong and Kuala Lumpur costs up to £500,000.

Source: FT