Hwa Hong buys into posh London area

PHOTO: Hwa Hong buys into posh London area

Hwa Hong Corporation is the latest local developer to set its sights on the vibrant London property market.

The listed company has bought a stake in a residential building in the posh neighbourhood of Kensington, it told the Singapore Exchange on Thursday.

The deal was done through a wholly-owned unit which bought a 19 per cent stake in an investment vehicle for about $9.9 million. The six-storey freehold property is on Allen Street, within 100m of Kensington High Street.

Hwa Hong's portfolio of properties in London includes freehold residential developments in Queensgate and Hornton Street. It also has stakes in office buildings in Central London, Manchester, Liverpool and Sheffield.

At home, it jointly developed the 545-unit freehold condominium RiverGate in Robertson Quay with CapitaLand.

The firm's investments manager, Mr Ong Eng Yaw, said it had always viewed investing in Britain as a means to diversify its property portfolio. He said that Hwa Hong has been able to make sound returns from the investments in the UK and "will continue to leverage our knowledge about the market there to look for further opportunities".

Thursday's announcement followed news last week that local developer Oxley Holdings had bought the Royal Wharf site, in the Docklands area of east London, from Irish developer Ballymore for $398 million.

The site is believed to be the largest piece of land sold in London since the Battersea Power Station was bought by Malaysia's SP Setia and Sime Darby's property arm for £400 million (S$800 million) last July.

Industry experts said that dampened sentiments in the local property market have led developers to look overseas.

"Developers feel that prices in Singapore are toppish and with all the cooling measures, it makes developing and selling in Singapore much more challenging," noted Jones Lang LaSalle's head of residential international project sales, Ms Doris Tan.

She added that developers could also be drawn to Britain because of the strengthening Singdollar. Since the financial crisis, it has stayed below $2.10 against the British pound. On Thursday, it was about $1.99 to one British pound.

Separately, a CBRE report noted that development activity has picked up in Central London, with 6,580 units under construction this quarter. Home prices in prime central London are expected to increase by 7 to 8 per cent on average by the end of the year, it said.

ocheryl@sph.com.sg


Get a copy of The Straits Times or go to straitstimes.com for more stories.