Published March 13, 2010

Destination Asia

Property prices in more mature Asian markets, while still off their highs, have been moving up in tandem with stock markets, and attracting interest from individuals in the upper end of the high net-worth range. By Geoffrey Eu

ASIAN buyers of luxury real estate may be raising their profiles in New York and London by picking up luxury homes at eye-popping prices, but they haven't been neglecting the property markets closer to home either.

While property prices in more mature Asian markets such as Singapore, Hong Kong and Thailand are still some way from their historical highs - courtesy of the beating they took due to global financial crisis - they have been moving up in tandem with stock markets, and attracting interest from individuals in the upper end of the high net-worth range.

'The very affluent go where they choose to,' says William E Heinecke, chief executive of Thai conglomerate The Minor Group, which among its diverse interests is a key player in the hospitality and lifestyle industries, with hotels, resorts and residential properties throughout the region. 'A lot of people come to Thailand for the weather,' he says. 'As a result, if you can afford it, you have homes where you spend time.'

Minor launched its first high-end residential property project in 1995 at the Four Seasons Residences in Chiang Mai. Its growing portfolio of luxury developments includes The Estates Samui in Koh Samui, and the high-rise St Regis Residences in Bangkok is slated for completion next year. Prices for its various properties range between US$2 million and US$6 million.

Mr Heinecke says that Indian and Chinese nationals, who may have domicile in key major cities around the world, have emerged as strong players in the mega-luxury bracket, but traditional buyers from other Asian countries as well as Europeans and Americans are also active in the region. 'As long as people have money and lifestyle is important, they are going to continue to buy in great locations,' he says.

He adds that a significant new trend involves branded luxury residences which are located within a hotel property and can be part of the rental pool, commanding rates of several thousand dollars a night. 'When owners visit their properties once or twice a year, it makes sense to have them professionally managed,' says Mr Heinecke.

Mr Heinecke says that the quality at the luxe end of the market continues to improve, and there is also no shortage of high-end properties and people who are willing to buy them.

'The bar continues to go up, and competition raises the bar,' he says.

The luxury investment bar continues to go up as well in Singapore, where the recent launch of hotel and property developer YTL Corporation's Kasara - The Lake collection at Sentosa Cove has yielded a highly positive result. The boutique development's 13 villas have all been sold, at prices ranging from S$14 million to over S$25 million.

Of the buyers, seven were foreigners from Asia while six were locals. In general, there are several types of high-end buyers, says Kemmy Tan, director of international real estate at YTL Singapore.

Asian buyers are typically from Hongkong, Indonesia, Malaysia and China, with an increasing number of expatriate Indians as well. 'American buyers may hold US passports but may not be living in the US, or they may be in places like Hongkong and have some interest in Asia,' says Ms Tan. At the peak of the market, there were also investors from places such as Ireland. 'When they invest, they invest with a longer-term view.'

Despite - or even because of - its restrictions on foreign ownership, Singapore has long been a significant target for investors. 'They are property investors who own homes in key cities,' she says. 'If values are expensive in their home countries and Asia looks attractive, they will come here - these are definitely people with multiple homes in different cities and resorts.'

Buyers of properties in resort destinations are different from those who buy in Sentosa Cove, says Ms Tan. 'They buy in Phuket and Bali for the resort lifestyle - those who buy here want the best of both worlds. They might have business interests and they want the comfort of city living. For wealthy investors, especially during the financial crisis, they are looking for good buys in 'safe' locations.'

The proportion of foreign investors versus locals has increased tremendously in the past few years, she adds. And the good news is there is still some upside.

'Real estate has always been a good hedge against inflation,' says Ms Tan. 'For luxury property, we are at least 10 to 15 per cent below the peak, so there's room to move up.'

Elsewhere in Asia, there have been recent reports of a US$45 million riverfront mansion on the market in Shanghai's financial district - an indication of the real estate boom in China. If those kinds of prices look a little scary, then there are always less heated up markets like Taiwan, where analysts report that foreign investors make up less than one per cent of the property market. Where opportunities go, of course, the money will always follow.

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