Bedford Square, Bloomsbury in central London. London will no doubt continue to attract foreign interest in some form. Source: Wikimedia
Singapore’s third largest lender, the United Overseas Bank, has announced that it has suspended its loan programme for London properties.
The decision came in response to uncertainty caused by the UK’s decision to leave the EU, the bank said.
The Singapore dollar has gained about 10 per cent since the June 23 referendum while the pound has slumped.
Singaporeans were among the top buyers of London property last year.
The UOB announced: “We will temporarily stop receiving foreign property loan applications for London properties.
“As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments.”
Asean’s third-largest bank by assets, the UOB said: “We are monitoring the market environment closely and will assess regularly to determine when we will re-instate our London property loan offering.”
Britain’s vote wiped almost US$4 trillion off the value of global equities and led to predictions that British property prices would fall as foreign buyers held back from new deals.
Law firm Collyer Bristow said that there was no sign of any other Asian banks withdrawing from London’s property market.
Alex O’Connor, a partner at the firm, said: “We’re certainly not seeing Asian banks or investors pulling back from UK property investments – if anything, there’s a rush by investors to get deals done. Dollar-denominated investors from Singapore, Hong Kong, the Middle East and elsewhere in Asia are keen to lock in favourable sterling exchange rates, and that’s resulted in a strong push for negotiations over contracts to be moved forward as much as possible.”
Singapore’s biggest lender, DBS, is continuing to provide financing while advising its customers to be cautious.
Tok Geok Peng, DBS’s secured lending manager, said: “For customers interested in buying properties in London, we would advise them to assess the situation carefully before committing to their purchases as there could be potential foreign exchange and sovereign risks,”
DBS provides loans in either Singapore dollars or pounds, with most customers opting to borrow in sterling to tie in with any rental income from a London property, the bank explained.
“For customers interested in buying properties in London, we would advise them to assess the situation carefully,” DBS lending chief Tok Geok Peng said.
“With foreign exchange risks, even if the value of the overseas property rises, any gains will be eroded if the country’s currency depreciates against the Singapore dollar,” Tok explained.
Singapore’s other large-scale lender, OCBC bank, said it had not made any changes to its advisory policy.
Head of lending Phang Lah Hwa said that OCBC was “still availing financing for London properties and monitoring the situation closely”.