Asian Property Investment Risky and Badly Performing
Written by Global Property Guide
Thursday, 31 May 2007
Asia’s real estate markets seem to have recovered from the Asian crisis and to be back on their feet. But the reality is quite different. Asia’s residential markets have performed poorly, according to a report released by the Global Property Guide. Once the price rise figures are adjusted for inflation, Asia’s record looks poor.
Asian residential property buyers beware!
Asia’s real estate markets seem, on the surface, to have recovered from the Asian crisis and to be back on their feet. In fact the entire world has enjoyed a residential property boom over the past decade - Europe, the US, Australia and New Zealand have seen property prices soar.
But in Asia the reality is quite different. Asia’s residential markets have performed poorly, according to a report by the Global Property Guide (http://www.globalpropertyguide.com). Once the price rise figures are adjusted for inflation, Asia’s record looks poor.
HOW ASIA’S RESIDENTIAL PROPERTY MARKETS HAVE PERFORMED SINCE THE PEAK (inflation-adjusted):
Hong Kong: still 61% below peak
Indonesia: still 50% below peak
Malaysia: still 10% below peak
Philippines: still 55% below peak
Singapore: still 37% below peak
South Korea: still 38% below peak
Thailand: still 10% below 1992 peak
“There have been few less profitable investments than Asian residential property over the past decade,” says Matthew Montagu-Pollock, publisher of the Global Property Guide.
“And if the present construction boom continues across Asia, the next decade isn’t going to be much fun for property investors either.”
Rental yields are quite high in Indonesia, Thailand and the Philippines, while Asian countries benefit from strong economies. But their real estate markets’ rise has been limited, primarily by government mis-steps.
“Asian real estate markets would have been stronger had it not been for government mistakes,” says Prince Cruz, chief economist for the Global Property Guide. “If it is not a coup, a protest rally or runaway inflation, then it is government meddling in the housing markets that has killed performance”. Cruz’s study points to the housing markets of Singapore, Hong Kong and South Korea as victims of government subsidies and intervention, while the housing markets of the Philippines, Indonesia and Thailand have suffered from political instability.
Asian prices still far below peak levels
Despite gleaming reports of recovery, Asian house prices are still below their pre-Asian Crisis levels. In a report released, Global Property Guide suggests that a combination of inflation, widespread subsidies of housing markets, political troubles, and overbuilding, have made the outcome in Asia quite different from other ‘boom’ markets. Asia’s present apparent property boom is a ‘construction boom - not a property boom’, it says, warning investors against following the tempting siren song of the real estate professionals.
When adjusted for inflation, the happy picture changes remarkably from the good news about property price rises.
Indonesia, for instance, is having a difficult time battling inflation. Corrected for inflation, Indonesia’s house prices actually fell 8.4% in 2005 and 7% y-o-y during 2Q 2006.
This year’s mild nominal price fall in Hong Kong (3.7%) is amplified by considering inflation. Hong Kong dwelling prices have actually fallen by 6% in real terms.
The (modest) apparent price rises in South Korea, Singapore and the Philippines actually become price falls, or are greatly moderated, once inflation is factored in.
Showing posts with label Asian Real Estate Show-2007. Show all posts
Showing posts with label Asian Real Estate Show-2007. Show all posts
Monday, June 4, 2007
Saturday, June 2, 2007
Malaysian investors keen on NZ and Australia
Malaysian investors keen on NZ and Australia
ASK any savvy Malaysian property investor and there is a high probability that he or she has property Down Under or in New Zealand.
This does not come as a surprise to Global Link Properties chief administrative officer (overseas properties) Norman Sia, who is a strong believer of the properties' investment potential.
Norman Sia does not believe Malaysians buying properties overseas will have any effect on the local market at all
“Malaysians are very interested in investing overseas, especially in developed countries which are politically stable and have transparent policies. They do it to preserve their wealth and to diversify their investments.
“Australia and New Zealand properties are more affordable compared with Singapore, Britain and Hong Kong,” Sia said.
In addition, property prices in Australia historically doubled every 10 years due to increasing costs such as land, labour and building materials, Sia pointed out.
He said Global Link Properties had introduced not less than 500 projects to Malaysian buyers comprising three types of properties – pure residential properties, student accommodation near learning institutions and condominium hotels, which are condos by usage but leased to hotels.
“Student accommodation and condo hotel cater to investors who buy for investment return so the properties sell faster.
“The least popular, in a sense, are residential properties, as prospective buyers find it hard to make a decision so it takes longer to sell the properties,” he said.
According to Sia, investments in hotel units provide the highest returns – a minimum of 6% net per annum – especially since Global Link focuses mainly on 4 to 5-star hotels.
“This is sustainable as such returns are achievable on a 30% occupancy rate. Student accommodation also offers good returns at 4.5% net annually,” he said.
About 80% of Global Link's clientele are people who run their own businesses as well as professionals who buy properties mainly for investment.
The balance are high net worth buyers who are not so concerned about returns but are looking for unique assets to add to their lists of properties.
“We had 200 to 300 investors last year and expect a 10% to 15% growth every year. We now have close to 200 investors this year. Sales have been boosted by a new project in Queenstown, New Zealand,” Sia said.
The Kawarau Falls Station project in Queenstown consists of 1,000 hotel apartments with a gross development value of NZ$1bil.
The project, launched in the beginning of the year, is 90% sold. It will start construction next month and is expected to be completed in 2011. Prices range from NZ$360,000 to NZ$1.5mil per unit.
Sia said about 60% of Global Link's sales were from Australian properties and 40% from New Zealand.
He said the company had put more emphasis on properties in New Zealand in the past two years as the products there were more unique. The Lord of the Rings movies have also made the country more attractive to property investors.
“We will be looking back at Australia in the next one year as property prices there have come down and stabilised. It will be a good time to pick up properties there,” he said.
The company will launch some new Australian and New Zealand projects here: two beachfront apartment projects in Gold Coast, Australia – one in two weeks and another in a month's time – and three projects in Melbourne – two apartment projects and students' accommodation.
He does not believe Malaysians buying properties overseas will have any effect on the local market at all.
“Those who invest overseas have their basket full of local properties already. Moreover, overseas investors are only a small group,” he said.
Sia himself has property investments overseas. About 85% of his property portfolio is in hotel units in Australia, New Zealand, Singapore, Hong Kong and Malaysia.
“It is important to look at income-producing properties. Brick and mortar is still the best investment where our wealth can grow with rental income thrown in as well,” he added.
ASK any savvy Malaysian property investor and there is a high probability that he or she has property Down Under or in New Zealand.
This does not come as a surprise to Global Link Properties chief administrative officer (overseas properties) Norman Sia, who is a strong believer of the properties' investment potential.
Norman Sia does not believe Malaysians buying properties overseas will have any effect on the local market at all
“Malaysians are very interested in investing overseas, especially in developed countries which are politically stable and have transparent policies. They do it to preserve their wealth and to diversify their investments.
“Australia and New Zealand properties are more affordable compared with Singapore, Britain and Hong Kong,” Sia said.
In addition, property prices in Australia historically doubled every 10 years due to increasing costs such as land, labour and building materials, Sia pointed out.
He said Global Link Properties had introduced not less than 500 projects to Malaysian buyers comprising three types of properties – pure residential properties, student accommodation near learning institutions and condominium hotels, which are condos by usage but leased to hotels.
“Student accommodation and condo hotel cater to investors who buy for investment return so the properties sell faster.
“The least popular, in a sense, are residential properties, as prospective buyers find it hard to make a decision so it takes longer to sell the properties,” he said.
According to Sia, investments in hotel units provide the highest returns – a minimum of 6% net per annum – especially since Global Link focuses mainly on 4 to 5-star hotels.
“This is sustainable as such returns are achievable on a 30% occupancy rate. Student accommodation also offers good returns at 4.5% net annually,” he said.
About 80% of Global Link's clientele are people who run their own businesses as well as professionals who buy properties mainly for investment.
The balance are high net worth buyers who are not so concerned about returns but are looking for unique assets to add to their lists of properties.
“We had 200 to 300 investors last year and expect a 10% to 15% growth every year. We now have close to 200 investors this year. Sales have been boosted by a new project in Queenstown, New Zealand,” Sia said.
The Kawarau Falls Station project in Queenstown consists of 1,000 hotel apartments with a gross development value of NZ$1bil.
The project, launched in the beginning of the year, is 90% sold. It will start construction next month and is expected to be completed in 2011. Prices range from NZ$360,000 to NZ$1.5mil per unit.
Sia said about 60% of Global Link's sales were from Australian properties and 40% from New Zealand.
He said the company had put more emphasis on properties in New Zealand in the past two years as the products there were more unique. The Lord of the Rings movies have also made the country more attractive to property investors.
“We will be looking back at Australia in the next one year as property prices there have come down and stabilised. It will be a good time to pick up properties there,” he said.
The company will launch some new Australian and New Zealand projects here: two beachfront apartment projects in Gold Coast, Australia – one in two weeks and another in a month's time – and three projects in Melbourne – two apartment projects and students' accommodation.
He does not believe Malaysians buying properties overseas will have any effect on the local market at all.
“Those who invest overseas have their basket full of local properties already. Moreover, overseas investors are only a small group,” he said.
Sia himself has property investments overseas. About 85% of his property portfolio is in hotel units in Australia, New Zealand, Singapore, Hong Kong and Malaysia.
“It is important to look at income-producing properties. Brick and mortar is still the best investment where our wealth can grow with rental income thrown in as well,” he added.
Sunday, April 15, 2007
A one-stop real estate shop
A one-stop real estate shop
Madhur Tankha
NEW DELHI: A three-day Asian Real Estate Show-2007 opened at Pragati Maidan here over the weekend offering international properties as well as investments in real estate across the country.
Designed as a "one-stop shop'' for everyone from the real estate world to showcase and market their properties and services, the show presents a unique combination of exhibition, education, and entertainment. It is being attended by the United Kingdom, United Arab Emirates, Malaysia, Singapore, Spain and the host country.
Stating that the Indian real estate market has emerged as one of the most attractive options to invest in the international market, Al Fajer Information & Services General Manager Satish Khanna says: "As the investment amounts are large, investors want to know about the developers and the projects developed by them before taking a final decision. The market in India for real estate would grow to 60 billion dollars by 2010 and then to 90 billion dollars by 2015."
Mr. Khanna says the rapidly growing real estate market in India is moving towards maturity with increasing participation from large local and international players, rising investor interest and a market-friendly approach.
All players of the real estate industry are exploring business and investment prospects. The show is highlighting various aspects of sustainable urban development, financing, architecture, environment branding, marketing and finance through seminars and workshops.
Moreover, buyers from across the world are witnessing a wide variety of real estate services. Besides purchasing properties, buyers are also clearing all issues they face with regard to the real estate sector.
Madhur Tankha
NEW DELHI: A three-day Asian Real Estate Show-2007 opened at Pragati Maidan here over the weekend offering international properties as well as investments in real estate across the country.
Designed as a "one-stop shop'' for everyone from the real estate world to showcase and market their properties and services, the show presents a unique combination of exhibition, education, and entertainment. It is being attended by the United Kingdom, United Arab Emirates, Malaysia, Singapore, Spain and the host country.
Stating that the Indian real estate market has emerged as one of the most attractive options to invest in the international market, Al Fajer Information & Services General Manager Satish Khanna says: "As the investment amounts are large, investors want to know about the developers and the projects developed by them before taking a final decision. The market in India for real estate would grow to 60 billion dollars by 2010 and then to 90 billion dollars by 2015."
Mr. Khanna says the rapidly growing real estate market in India is moving towards maturity with increasing participation from large local and international players, rising investor interest and a market-friendly approach.
All players of the real estate industry are exploring business and investment prospects. The show is highlighting various aspects of sustainable urban development, financing, architecture, environment branding, marketing and finance through seminars and workshops.
Moreover, buyers from across the world are witnessing a wide variety of real estate services. Besides purchasing properties, buyers are also clearing all issues they face with regard to the real estate sector.
Subscribe to:
Posts (Atom)
