This article by OPP Connect editor Adrian Bishop was originally posted on OPP Connect.
Overseas property finance is in increasing demand, particularly from Asian investors, says a leading provider.
Despite rising inquiries for foreign finance, some wealthy property investors, particularly from China and Russia, are able to pay in cash, says overseas property and finance specialist Simon Conn.
Conn tells OPP Connect, “We are very busy with people from Asia buying abroad. We are getting increasing inquiries from people in Singapore, Hong Kong and China. They are looking to buy not just in the U.K., but also in other parts of Europe.
“It is never a problem to get [financing], and there is a good supply of lenders for foreign buy-to-let and commercial sectors, which are most popular, and rates are competitive. In fact, for buy-to-let in countries like Spain and France there is no differential.
“The market is getting busy and there is a lot of money in those countries. In fact, a lot of Chinese and Russian clients have a lot of money and are buying in cash and so don’t need a mortgage. There is a lot of money for the ‘Golden Visas.’ ”
Conn says he is developing high net worth products through Swiss and Luxembourg private banks for those typically seeking sums of over 1 million pounds.
But he cautions all investors to carry out proper due diligence and obtain professional advice when buying overseas property. “Things are getting busier this year, but I do worry when people start to rush into things. Anyone who is going to buy should always get independent legal advice and professional valuation.”
Singaporeans still hoping to snap up overseas properties, despite having their borrowing capacity curbed by the total debt servicing ratio (TDSR), are considering offshore loans to finance their purchases, foreign bankers confirm.
Some property agents say there have been more inquiries of late from clients for overseas loans, according to a report in the Business Times.
The TDSR caps an individual’s total monthly loan repayment at 60 percent of gross monthly income, taking into account property- and nonproperty-related loans, as well as onshore and offshore loans.
Linda Lee, executive director for deposits and secured lending at DBS Bank, says despite the introduction of the TDSR, applications for overseas property loans are still rising, and Cherrin Loo, head of international residential sales at Savills Singapore, says many property investors can afford to pay cash for projects costing under $1 million Singapore dollars (around $800,000 U.S. dollars).
Singapore banks provide property loans for purchases in popular locations including London, Malaysia, Australia, Tokyo, Thailand, China and New York.
Sales of overseas properties to Singaporeans grew 13 percent year over year in the first three months of the year, according to data from agent Colliers International.
Peter Allen, sales and marketing director at London-based luxury residential developer Londonewcastle, says as more global launches take place the demand for foreign financing is set to rise further.
Overseas mortgage specialist Conti says mortgage rates in France are at their lowest in decades.
Deals currently start at 2.1 percent for a variable mortgage over 10 years and 3.75 percent for a 25-year fixed-rate mortgage, and are available for mortgages of up to 80 percent loan-to-value. For buyers with deposits of at least 15 percent there are a range of deals available, which starts at just 3.05 percent.
Conti Director Clare Nessling says, “In the past, many British buyers of French property have financed their purchase by using the equity in their existing U.K. home, which has effectively enabled them to pay with cash. As the French mortgage market has become more developed, however, competition among French lenders for overseas business has moved apace. And a timely combination of excellent lending conditions means that there’s probably never been a better or more affordable time to borrow for your French property purchase.”
