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Foreign developers look to Asians to drive sales

They're wooing investors in the region in face of weak demand at home

Published on May 12, 2012

By Esther Teo, Property Reporter


OVERSEAS property developers are increasingly setting their sights on Asia - including Singapore - to drive their sales to make up for weak demand back home.

They hope that deep-pocketed investors in the region who are frustrated with low bank interest rates will choose to invest in other corners of the globe.

While economies in Europe and the United States are stagnant at best, the Asian growth engine is chugging along steadily, flush with funds drawn from across the world seeking better returns.

That has meant that investors abroad have looked to Asia to diversify their investments, driven away from Europe, for instance, by the euro zone debt crisis.

But a growing number of overseas developers are looking to pull some funds in the other direction, by eyeing buyers in this region when marketing projects.

They have taken their roadshows to economies including Hong Kong, Malaysia and Singapore.

In fact, some roadshows for property in London are launched in Asia first, said Mr Darien Bradshaw, the executive director of consultancy CBRE's international property marketing arm for Asia.

He said this reflects the perception that Asian buyers have cash to spend.

CBRE is currently marketing Fitzroy Place in London's West End. Mr Bradshaw said that the roadshow here had received a 'good response' with about 40 per cent of the project's investment demand from here. About 30 per cent is from Hong Kong while the remainder is from London itself.

While traditional areas like London, Melbourne and Kuala Lumpur have always been offered as investment alternatives, investors are also being enticed to plonk their savings into less familiar cities such as Chengdu and Houston.

For instance, marketing agent Roof Real Estate Group is holding a property exhibition this weekend seeking investors for homes in Houston.

Hong Kong-based Centaline Property Agency is having a similar exhibition on investing in Chengdu. The firm emphasised the growth potential of the yuan over the next few years and the strength of the Chinese economy compared with the stagnant or slowing growth in European countries.

Experts say that low interest rates and tighter credit conditions in the real estate sector of some Asian markets have prompted investors to look to investments further afield.

But they are also keen to partake in the growth story right in their backyard.

Residential projects in Thailand and Malaysia that have been marketed here, for example, have attracted interest from Singaporean investors.

Centaline's regional sales director Janice Low said the firm has received 'strong interest' for its Chengdu exhibition and expects about 50 potential investors to turn up.

While this is the first time the firm is bringing in an overseas project, it hopes to eventually bring in about one project a month. The projects will be located in Asian markets - Hong Kong, mainland China and Taiwan - where it operates.

On whether there is still upside for Asian home prices that are already high, Ms Low said: 'The various governments are not going to depress the market... They are just doing what the Singapore Government is doing which is to create a sustainable property market.'

International Property Advisor chief executive Ku Swee Yong expects foreign developers to continue marketing their projects here as the strong Singdollar, high home prices and cooling measures have led to many locals considering overseas purchases.

His top picks are well-located projects in London and Perth, but he emphasised that an investor should always select projects in good locations with an idea of what rental demand is like.

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