One of Singapore’s three homegrown lenders, United Overseas Bank (UOB), announced that it would be temporarily suspending loans to anyone wanting to buy property in London, citing uncertainty from Britain’s vote to quit the EU.
UOB currently has the biggest share of loans for London property, among the top 3 Singapore lenders. UOB announced that it would monitor the market closely to determine when the loans would resume.
Other Singapore banks are also advising their clients to be cautious over political and foreign exchange risks post Brexit as gains from an increase in the value of a property could be easily eroded by a depreciation in exchange rate.
The remaining two homegrown lenders, DBS and OCBC, announced that they would continue to make financing available for London property purchases but indicated that they would be monitoring the situation closely. Thus far, the initial impact of the Brexit vote on the London property market has been mixed with some buyers scrambling to purchase properties while others have withdrawn from the market.
Buyers have also rushed to renegotiate deals in the market. A number of high profile deals have proven to be at risk including the sale of Cannon Place in the city of London for approximately £465m and the acquisition of 1 Wood Street in the City.
We expect Asian investors to continue to find the UK property market attractive in the near term on the basis of high liquidity. Nicholas Holt, Head of Research for Asia Pacific at Knight Frank also said “The significant drop in the value of pound could lead to an uptick of interest by Asian investors, who over the past few months have adopted a wait-and-see approach to the referendum and will now see their buying power increase”.
The tourism market has also seen a boost as the weaker pound makes British goods and services cheaper. Searches by people for UK holidays began to surge after news of Brexit broke. We wouldn’t be surprised to see a surge in the number of Chinese and Middle East tourists to UK in the near term as their purchasing value increases.