Asian property contenders

On the head-spinning Asian property ride, certain countries seem to hit the highs more publicly than others. Singapore constantly sees its name in lights as a beacon of Asian wealth and residential extravagance, Hong Kong is always in the global Top 10 list when it comes to luxury property and record prices. More recently, Bangkok has edged itself into the big league with high-end brand names like St.Regis, Ritz Carlton and Waldorf Astoria entering the ultra luxe arena for those in search of the ultimate downtown pad.

How long these locations hold on to their luxury hotspot crown, however, is debatable. Indonesia is already a regional economic giant and Knight Frank’s Asian Residential review shows consistent property price growth in all segments of the market, which has been rising 3.6 percent annually. The average prices at the luxury end of the market are expected to grow by 5-10 percent in 2012, with luxury condominiums offering stable performance thanks to a limited existing supply and only a handful of luxury projects coming online in the next two years.

Then there’s the Philippines, more specifically Metro Manila. According to Colliers International, while the average GDP growth across the ASEAN countries has slowed to 4.8 percent from 6.9 percent, the Philippine economy managably grew 3.7 percent last year. Areas such as Makati, Rockwell and Bonifacio Global City have expanded upwards at breakneck speed, with developers like Century Properties, Ayala Land and Rockwell Corporation driving the luxury segment ever higher. When Trump Tower Manila officially broke ground last month, Donald Trump, Jr. was more than enthusiastic, saying that he wanted “to take the level of high-end real estate experience in Manila and the Philippines, a country that’s done so well as of late, to levels that have never been done there before.”

All this activity and growth is clearly positive news for regional luxury property investors, but the countries in question also need to take a long hard look at issues that may deter global investors. Ownership laws, investment security and transparency are all key qualities that places like Singapore and Hong Kong bring to the table, and these are crucial fundamentals for other countries looking to draw significant international investment at the luxury end of the market.

Foreigners are allowed to purchase a condominium unit in the Phillippines, but not land, yet Colliers research shows landed properties to be the most favoured lease option for expatriates in areas like Makati. Impending regulations in Indonesia may soon give foreigners the right to apply for the purchase of a Building Ownership Certificate (SKBG), effectively allowing for direct property purchases, However, this will also involve restrictions. Non-nationals will not be permitted to participate in resident associations, for example, and as is the case in Manila, the law will also restrict how many units can be owned by foreigners in a single building.

Other obstacles to foreign property investment include personal security issues and the comparative standard of urban lifestyle on offer in various Asian cities. Although Thailand also suffers from complex foreign ownership regulations; the country’s reputation for hospitality, safety and quality of life gives it the edge over many of its neighbours. Improved transport links, ever more sophisticated dining and retail options and clearly defined luxury enclaves all contribute to an investment friendly landscape that appeals to both domestic and foreign buyers.

Source: PropertyReport – 2012 Jul 18


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