Wealthy Indonesians Buying London Properties
Knight Frank’s recent study showed a steady increase of Indonesian millionaires purchasing Prime Central properties in London as their second homes.
According to Knight Frank’s Asia Pacific Research Manager, Nicholas Holt, Indonesia has moved up two spots last year in Knight Franks Asian Buyers in London list, from the 11th place in 2012 to the 9th place last year. He also said that interest from these potential buyers increased 100% in 2011.
Mr. Holt also stated that one of the reasons rich Indonesians are purchasing London properties as their second homes is due to the weakening value of the British Pound against the Rupiah thus making London properties relatively cheaper for Indonesians.
The other reason is due to the fact that London has been cemented as a “safe haven” for investments and with it’s demand exceeding supplies, being able to purchase a property in London is the latest status symbol made by the rich and wealthy.
London is expected to see 374,110 new households by 2020, while the number of current residential units with planning permission is 214,825 and units under construction is 43,357.
The study also found that Singapore remains the most preferable location for Indonesian-based property buyers. The newly implemented additional buyer’s stamp duty (ABSD), however, will have an effect on property interest.
The ABSD was imposed by the Singaporean Governments in 2011 for private property and foreigners will have to pay 10 percent of ABSD on any purchased property.
“Even though developers will be absorbing some of the ABSD and the burden will not fall completely on the purchasers, it will still have an affect on the number of transactions,” Holt said.
Knight Frank’s research shows that Indonesians are among the top three property buyers in Singapore after China and Malaysia. In 2011, Indonesians bought 1,714 properties in Singapore. In the first quarter of 2012, the number was 137.
The research also showed that Indonesian residential property prices ranked 60th, with Kuala Lumpur and Bangkok coming in at 57th and 51st respectively, in the Prime International Residential Index 2012. Prime residential property in Jakarta costs $2,900 per square meter, while in Kuala Lumpur the price is $5,000.