reporter2
17-06-13, 15:59
http://www.businesstimes.com.sg/archive/saturday/specials/property/price-may-be-right-look-beyond-hype-s-e-asia-20130613
Published June 13, 2013
Price may be right but look beyond hype in S-E Asia
Navigating local risks is crucial, and sustainable growth is key to market
By ong chor hao
[SINGAPORE] South-east Asia may offer new and potentially lucrative investment property options for Singapore investors, but market watchers are calling for a clear mind when venturing into these new grounds.
Excluding the interest in the already-buoyant Malaysian property market, industry players The Business Times spoke to have observed that Singaporeans are looking to the region for investment properties; overseas developers are targeting Singapore buyers as well.
Reasons for this upswing of interest are fairly plain.
Tim Murphy, CEO and founder of property investment company IP Global said: "Obviously, it's no secret the amount of wealth that exists in Singapore."
Another reason for the interest in property in the region lies in real estate costing much more in Singapore, which has put a crimp on Singaporeans' dreams of investing in property here.
"And of course our cooling measures have had an impact," said Johnny Chng, the head of international projects at OrangeTee, who noted in particular the introduction of an additional buyer's stamp duty.
South-east Asia property prices compare favourably against those from traditionally popular overseas markets, he said.
For example, a small apartment of about 300-400 square feet in a good location in Bangkok or the Philippines would cost around S$100,000 to S$200,000.
In London, a place of comparable size would set one back £600,000 (S$1.18 million); in Melbourne, an investor has to be prepared to pony up A$300,000 to A$500,000 (S$355,000 to S$591,000).
But property consultants say that while the growth potential for South-east Asian markets may be tempting, there are challenges - especially in navigating local ownership laws, financing and investor protection. (See table)
IP Global's Mr Murphy said that because of some of these challenges, investors should wait until they are sure that risk is minimal for most of Asia: "Wait until you can clearly identify that the risk is minimal in terms of legal ownership - can a foreigner buy there, can I have a legal title, is it mine, is my name on the title, and will a bank lend me money? If you can't get a positive answer to those questions, I would be quite nervous about it - unless you're so rich it doesn't matter."
He said he usually recommends that his clients invest in more mature markets such as London or in the US.
Consultants also stress that potential buyers need to look beyond the marketing hype.
Mr Murphy said there must be an understanding of what the price per square foot is compared with similar properties nearby, and not just how "nice and shiny" the building or brochure is.
Marc Townsend, the managing director for CBRE Vietnam, reckoned that for "frontier markets" such as Myanmar, Laos, Cambodia and Vietnam, investors should look for signs of sustainable growth.
These can take the form of rental demand holding steady in the long term, and shifts in domestic consumption patterns. Growth that is supported solely by Singaporean investors makes for "unstable ground", he said.
"Unfortunately, journalists and estate agents comment on the number of Rolls Royces and Ferraris, which - to be honest - is pretty irrelevant. What we should be commenting on is how many new Yamaha scooters and Suzuki motorbikes there are."
He has trained his focus on Myanmar, the new darling for investors here.
"I think when a market opens up like that, there is incredible euphoria and people never think that the roof is going to collapse or cave in," he said.
But he recalls the property slump in Vietnam after a similar initial torrent of investments, and warned that rental earnings in such frontier markets can fluctuate wildly.
That said, Mr Chng from OrangeTee is bullish about the Asean member state. Noting that Myanmar nationals in Singapore alone have snapped up more than 40 units in two Myanmar projects the agency brought in last October, he said this was a clear indication of the confidence that Myanmar citizens have in their homeland for the longer term.
Singaporean investors are acknowledged among property consultants as being among the more sophisticated ones around.
Alex Bellingham, the director at IP Real Estate Investments, the Singapore office for IP Global, said: "They understand yield, they understand growth, they understand ownership structures, mortgage finance, tax, liquidity - all the good stuff."
Published June 13, 2013
Price may be right but look beyond hype in S-E Asia
Navigating local risks is crucial, and sustainable growth is key to market
By ong chor hao
[SINGAPORE] South-east Asia may offer new and potentially lucrative investment property options for Singapore investors, but market watchers are calling for a clear mind when venturing into these new grounds.
Excluding the interest in the already-buoyant Malaysian property market, industry players The Business Times spoke to have observed that Singaporeans are looking to the region for investment properties; overseas developers are targeting Singapore buyers as well.
Reasons for this upswing of interest are fairly plain.
Tim Murphy, CEO and founder of property investment company IP Global said: "Obviously, it's no secret the amount of wealth that exists in Singapore."
Another reason for the interest in property in the region lies in real estate costing much more in Singapore, which has put a crimp on Singaporeans' dreams of investing in property here.
"And of course our cooling measures have had an impact," said Johnny Chng, the head of international projects at OrangeTee, who noted in particular the introduction of an additional buyer's stamp duty.
South-east Asia property prices compare favourably against those from traditionally popular overseas markets, he said.
For example, a small apartment of about 300-400 square feet in a good location in Bangkok or the Philippines would cost around S$100,000 to S$200,000.
In London, a place of comparable size would set one back £600,000 (S$1.18 million); in Melbourne, an investor has to be prepared to pony up A$300,000 to A$500,000 (S$355,000 to S$591,000).
But property consultants say that while the growth potential for South-east Asian markets may be tempting, there are challenges - especially in navigating local ownership laws, financing and investor protection. (See table)
IP Global's Mr Murphy said that because of some of these challenges, investors should wait until they are sure that risk is minimal for most of Asia: "Wait until you can clearly identify that the risk is minimal in terms of legal ownership - can a foreigner buy there, can I have a legal title, is it mine, is my name on the title, and will a bank lend me money? If you can't get a positive answer to those questions, I would be quite nervous about it - unless you're so rich it doesn't matter."
He said he usually recommends that his clients invest in more mature markets such as London or in the US.
Consultants also stress that potential buyers need to look beyond the marketing hype.
Mr Murphy said there must be an understanding of what the price per square foot is compared with similar properties nearby, and not just how "nice and shiny" the building or brochure is.
Marc Townsend, the managing director for CBRE Vietnam, reckoned that for "frontier markets" such as Myanmar, Laos, Cambodia and Vietnam, investors should look for signs of sustainable growth.
These can take the form of rental demand holding steady in the long term, and shifts in domestic consumption patterns. Growth that is supported solely by Singaporean investors makes for "unstable ground", he said.
"Unfortunately, journalists and estate agents comment on the number of Rolls Royces and Ferraris, which - to be honest - is pretty irrelevant. What we should be commenting on is how many new Yamaha scooters and Suzuki motorbikes there are."
He has trained his focus on Myanmar, the new darling for investors here.
"I think when a market opens up like that, there is incredible euphoria and people never think that the roof is going to collapse or cave in," he said.
But he recalls the property slump in Vietnam after a similar initial torrent of investments, and warned that rental earnings in such frontier markets can fluctuate wildly.
That said, Mr Chng from OrangeTee is bullish about the Asean member state. Noting that Myanmar nationals in Singapore alone have snapped up more than 40 units in two Myanmar projects the agency brought in last October, he said this was a clear indication of the confidence that Myanmar citizens have in their homeland for the longer term.
Singaporean investors are acknowledged among property consultants as being among the more sophisticated ones around.
Alex Bellingham, the director at IP Real Estate Investments, the Singapore office for IP Global, said: "They understand yield, they understand growth, they understand ownership structures, mortgage finance, tax, liquidity - all the good stuff."