Manchester-based UK property company Select Property Group set up its Asian headquarters in Singapore last October. It has taken up 1,800 sq ft of office space at CapitaGreen, a landmark Grade-A office tower on Market Street in the CBD.
Select Property set up its Asian headquarters in Singapore to forge a closer relationship with its clients and better understand their needs, says Adam Price, the group’s managing director for global sales.
Singaporeans account for about one quarter of the investors from Asia that make up 20% of the group’s global investors. In fact, Singaporeans were among the first buyers of its Vita student accommodation units in 2012, adds Price.
Price: Select Property set up its Asian
headquarters in Singapore to forge a
closer relationship with its clients and
better understand their needs
But Select Property has stopped offering its Vita student accommodation units for sale to individual investors, after the last scheme was sold last month. Today, it offers student accommodation for block purchase to institutional investors.
The group has developed two other series of properties, namely City Suites serviced apartments and Affinity Living build-to-rent apartments. Both types of properties have been launched for sale to individual overseas investors.
Last month, the group launched its maiden serviced apartments and build-to-rent apartments in Manchester, namely City Suites Manchester and the 188-unit Affinity Living Riverside, respectively. To date, 230 of the 280 units of City Suites Manchester have been sold, at an average price of £232,000 ($446,191), on a 250- year lease. The units are a mix of studios, and one- and two-bedroom apartments that come with a rental yield guarantee of 7% per annum for the first three years.
A two-bedroom unit at City Suites Manchester, which has 280 units of studio and
one- and two-bedroom serviced apartments for sale at an average price of £232,000
City Suites Manchester, targeted at business travellers, is scheduled for completion in November. Select Property will then lease out the units on behalf of the investors. As these are serviced apartments, the rental period will be one, three or 12 months.
Meanwhile, 110 of the 188 units at Affinity Living Riverside have been sold, with Singaporean investors snapping up 21 of them. Another 24 units were released for sale on April 14, says Elliot Vure, sales manager for Asia, Select Property Group. Prices of these build-to-let apartments range from £150,000 for a studio to £220,000 for a one-bedder and £270,000 for a two-bedroom unit. All the apartments are fully furnished, and investors are given a minimum rental guarantee of 6% for the first two years. The property also has a 250-year lease.
Affinity Living Riverside in Manchester has 188 build-to-let apartments, with prices ranging from £150,000 to £270,000
According to Price, the rental yields offered to investors are above the prevailing market rental yield in Manchester, which hovers at 4%. However, when the rental guarantee period expires at the end of the two years, investors may get a lower yield at the prevailing market rate, he adds.
Affinity Living Riverside is scheduled for completion in March 2018. Owners can only choose to exit their investment at the end of the two-year rental guarantee period, says Vure. They can either engage Select Property to sell the units on their behalf or engage their own broker.
Vure: The UK government’s decision to
implement the 3% stamp duty is to drive
home ownership and give homebuyers
an advantage over buy-to-let landlords
Select Property has focused on developing student accommodation since 2008, and it was only last year that it embarked on the development of City Suites serviced apartments and Affinity Living build-tolet apartments.
However, from this month, investors in serviced apartments and build to-let apartments in the UK will be hit by an additional 3% stamp duty. The stamp duty, combined with the capping of mortgage tax relief announced in 2015, has led to what is widely considered as the “death of buy-to-let”. “The UK government’s agenda is clear,” says Vure. “What it wants to do is drive home-ownership and give homebuyers an advantage over buy-to-let landlords.”
The longer-term effect of the higher stamp duty on buy-to-let will lead to a steady decline in the supply of such rental property and free up homes for families and first-time buyers, Vure adds. “There will be a gap in the market for renters which will be filled by purpose-built accommodation, such as Affinity. As generational attitudes towards home-ownership change, more people are choosing to rent as a lifestyle choice.”
This article appeared in the City & Country, Issue 724 (April18, 2016) of The Edge Singapore.