5 Strongest Real Estate Markets in Asia-Pacific

2017 is going to be a big year for Bangalore real estate.

With a blossoming tech sector, the Indian megalopolis is the new champ in the latest City Investment Prospects survey released this week with the annual Emerging Trends in Real Estate Asia Pacific report by the Urban Land Institute and PricewaterhouseCoopers (PwC).

Bangalore switched its 12th-place ranking last year with former first-placer Tokyo. Sydney and Melbourne dropped from the second and third place, giving way to two Southeast Asian cities.

“This year’s Investment Prospects survey shows a strong shift away from last year’s favourites, which featured core markets in Japan and Australia,” KK So, Asia Pacific real estate tax leader at PwC, said. “Instead, it favors emerging-market destinations. It is also notable that several gateway cities are in the bottom half of the list – indicating their declining popularity.”

Here are the cities with the strongest property investment prospects next year:

 

1. Bangalore

Bangalore’s status as a magnet for business process outsourcing (BPO) and other IT industries has never been stronger. An overarching need to open call-in and research-and-development (R&D) centres underpins a huge demand for office space in the city, which also placed number one on the report’s Development Prospects index.

 

2. Mumbai

hile you shouldn’t expect “rising prices” in Mumbai’s residential market next year, as one survey respondent put it, the Indian metropolis is faring well in the office sector. High-grade assets are drawing strong demand and rental growth. Major road and rail infrastructure works, due for completion in 2019, will connect outlying areas to the city centre.

 

3. Manila

Like Bangalore, Manila is thriving on the strength of the BPO industry and showing “good growth” in office capital values and rents. Remittances from overseas Filipino workers (OFWs) continue to gush in strongly, although they are palpably hurting from decelerating economies in the Middle East, where many workers are based.

The market is also coming to a “very heated point in the property cycle,” as developers confront the issue of sourcing land in the populous city.

4. Ho Chi Minh City

 

shutterstock_93690058

 

Now “on the radar screen of nearly all the major investors in the region,” Vietnam and its largest city are benefiting from continued capital inflows from Japan, Singapore, and Hong Kong. There is a real risk of an oversupply in the condominium sector, but landed house purchases remain as popular as ever. Office rentals are now higher in HCMC than Bangkok.

5. Shenzhen

 

shutterstock_420976561

 

Shenzhen’s residential market is the fastest-growing in the world, rocketing more than 40 percent year-on-year in the first three-quarters of 2016, the researchers noted. Office rents have doubled their values in 2009.

The full ranking of cities with the best investment prospects for 2017:

 

  1. Bangalore
  2. Mumbai
  3. Manila
  4. Ho Chi Minh City
  5. Shenzhen
  6. Shanghai
  7. Jakarta
  8. Bangkok
  9. Sydney
  10. Guangzhou
  11. Beijing
  12. Tokyo
  13. New Delhi
  14. Auckland
  15. Osaka
  16. Melbourne
  17. Seoul
  18. Hong Kong
  19. Kuala Lumpur
  20. China–secondary cities
  21. Singapore
  22. Taipei
Advertisements
Posted in Iskandar Information | Leave a comment

Singapore Property Market is a falling knife like JB’s

While Singapore has long been South East Asia’s biggest success story (with property prices to match), the current climate poses another, less rosy picture.

With a declining economy and fears of a recession in the air, real estate values have hit new lows, and record numbers of agents are turning their backs on the business entirely. The downturn may seem sudden to some, but for those keeping a beady eye on things, this was to be expected.

“Singapore is at a crossroads at this point,” says Dan Toh, founder and CEO of consulting firm RunningStream International. “The country is facing new challenges that require it to innovate its way through the rise of ASEAN and a very different world economic landscape due to globalization.”

Singapore has achieved phenomenal economic progress over the last 50 years. However, as a country reliant on outside resources, its continued success depends on a great many factors outside its immediate control.

“The equalization of economies in ASEAN means that the neighboring countries are getting increasingly sophisticated. Infrastructural advantage is being eroded by the pervasiveness of the internet, and its geographical advantage by the progress of regional logistic capabilities,” Toh explains.

This is especially true in light of China’s effort to improve the region through rails, ports and shipping canals. Singapore will likely be collateral damage in the process.

While in the real estate world, cooling measures may have effectively moderated price growth, the overall declining economy poses a much greater risk. Singapore is seeing a drastic fall in transactions and rental demand as the country becomes less attractive both in terms of costs and infrastructural advantages for business. Fewer jobs and fewer foreigners equate to less overall demand, especially in the luxury segment.

“Increasing unemployment and a weak rental market means that now is not the best time to be investment hunting in Singapore,” Toh says. “That said, Singapore will remain a key player in ASEAN and will continue to serve as a base for many businesses. The property market will certainly not crash.”

If one has to buy now, Toh suggests bargain hunting in prime zones, citing Districts 1, 2, 6, 9, 10 and 11 as districts to watch, whereas River Valley, Newton, Tanglin, Upper Bukit Timah are all pretty exposed to the mid tier foreigners and thus hold significant market risks.

A good bargain, he explains, would be in the area of 20 percent discount. “Naturally, finding such deals will not be easy. But weak rental conditions and potential weakening of the SGD alongside rising interest rates may motivate foreign owners to seek an exit. Locals will hold out better.”

In terms of the kind of properties investors should consider, two bedrooms allows for the best growth potential and balanced yield, Toh advises. Buyers should only consider buying now if they are wanting to live in – buying a rental property would not be wise given the current outlook.

“Investors should not try to catch a falling knife”

Ideally though, investors would be well advised to wait a couple of years, and late 2017 and early 2018 is when Toh predicts the country’s fortunes may start to change.

“Currently, Singapore prices have escalated to a point where it is non viable,” he says. “Given the current economic challenges I suspect the government will be happy to let the prices fall to increase the country’s competitiveness, and unless business conditions improve, I wouldn’t see the motivation to let prices rise again just yet.”

For this to happen, Singapore will need to reinvent itself and find a new catalyst for growth. At this point, Toh says, this still seems a little distance away, however, he is confident that Singapore’s star will soon rise again.

“The country’s track record should inspire some amount of investor confidence. Singapore will remain a key market, but for its property to boom again we will need to see some major new directions. Only when that happens would I be keen to call a property bull market.

“In other words, investors should not try to catch a falling knife, and instead wait for signs of new upward economic momentum.”

Posted in Iskandar Information | Leave a comment

Malaysia properties continues to fall in 2017

Prices of luxury homes, especially strata units, are expected to decline this year due to the absence of the Developer Interest Bearing Scheme (DIBS), which previously played a role in pushing up the cost of these properties, according to CBRE-WTW Managing Director Foo Gee Jen.

“You have to go back to the history of what happened two to three years ago. Whenever developers offer a project, a lot of DIBS and so forth were catered to stratified properties. For landed properties there were no issues in selling so there’s not so much mark-up in terms of pricing for landed properties but a lot of mark up for stratified properties.”

As such, he believes that prices of upscale strata residences could fall by 10 percent to 15 percent in 2017, while the cost of landed housing could drop by 10 percent or lower.

Foo explained that many people who have purchased units with the aid of DIBS and other rebates two years ago are now selling them at lower prices, and this trend is particularly evident in Kuala Lumpur, Kota Kinabalu and Johor Bahru.

In the subsale market, Foo noted that sellers are now more practical, reducing the gap between the asking price and the final agreed amount.

“I believe strongly that the price correction has started. A lot more developers are taking note of that. A lot of them are suffering. Some of the high-end products are not moving and if you go into their showroom it is very quiet.”

Based on his company’s research, the overall number of upscale condos in Kuala Lumpur reached 37,824 units last December. Of this, units costing between RM700 to RM1,000 psf account for 86 percent, but this could slide to 64 percent in 2019.

For high-end units valued from RM1,001 to RM1,500 psf, these are expected post the highest growth of 4,000 units per annum on average, comprising 23 percent of total number of condominiums by 2019.

But the most problematic segment in the housing market are SOHOs/SOVOs (small office home office/serviced office virtual office), as occupancy levels are so low given the supply glut. This situation is expected to persist until the government’s infrastructure projects are finished in the next three to four years.

Once these infrastructures are established, these are anticipated to bolster the SOHO/SOVO sector, and some landlords would find it easier to rent out their units via websites like Airbnb, said Foo.

Overall, the housing sector is forecasted to be flattish in 2017 and lower in terms of value as more builders venture into low-cost flats.

“The only good sign is a lot more developers will venture into affordable housing. If the government pushes hard enough in terms of supply of PR1MA homes and others, the residential segment, I think, will see a slight improvement but overall if you add up the rest, commercial and others, I think it (volume) will be very flat,” he added.

Posted in Iskandar Information | Leave a comment

Metro Homes Iskandar 2017 Letter

Dear Metro Homes Iskandar colleagues since 2012,

We have come a long way since the heydays of property boom in 2013 to the present lull in 2017. Property markets move in cycles and its inevitable that we would move from the current low to another high point again in the medium to long term.
We have started our MHI office in Horizon Hills office in Sept 2012, being the 1st property agency to open in Horizon Hills when the shoplots are mainly vacant back then. We spent two very busy years in 2013 and 2014, followed by a slowdown in the next two years 2015 and 2016. At its peak we have slightly more than 100 RENS & Expat Consultants, when the market was red hot in 2013 and 2014.
Today in Jan 2017, we have trimmed lots of fats and slimmed into a lean team of not more than 10 active RENs. The matured and actives players are still earning their keeps, having established themselves as the niche markets leaders in Horizon Hills, East Ledang, Puteri Harbour and Leisure Farm. They are still doing well and would do better in the coming years when the market slowly returns to its bull cycle in the next few years.
From Jan 2017, we have moved to our own shop office purchased in 2014, and completed in Q4 2016 in Ion Medini. The address is :
No.8-1, Blk D1, Pusat Perdagangan Ion Medini 1, Persiaran Medini Sentral 6,  
Bandar Medini Iskandar, 79600 Iskandar Puteri, Johor, Malaysia.
We are using the 1st floor office with the same experienced Admin staff Fazilah and an additional colleague, Joel Desilva, who is our D&Jo Hospitality Asst Manager. Joel is in charge of our short term leasing business, with special focus presently in our Afiniti Residensi Legoland Serviced Apartments where we manage about 30 units. Our shoplot ground floor No. 8 is still vacant and is open for any business opportunities from all of you.
We have a 10 plus people Hi-Tea gathering in our MHI’s Ecoworld Botanic Corner Villa on 14 Jan 2017 and we look forward to another gathering in our shop office in the next quarter.
I hope everyone continue to stay in touch via our What’s app group and via emails as well, till better days return for us to strive again…..
Posted in Iskandar Information | Leave a comment

Johor Sultan replies to Dr Mahathir

Johor ruler Sultan Ibrahim Sultan Iskandar has blasted former prime minister Dr Mahathir Mohamad for claiming that Johor is “surrendering land to the Chinese”, and said the veteran politician has “gone too far”.

In an exclusive interview with The Star published today, the sultan is reported as saying he was “deeply offended and hurt” by Mahathir’s comments made over the past weeks.

“Enough is enough. I have so far restrained myself from commenting on the controversy on Forest City generated by Dr Mahathir and his supporters.

“But Dr Mahathir has gone too far with his twisting of the issue. He is making allegations that 700,000 mainland Chinese will stay in JB, and that citizenships will be given away, and that huge tracts of land have been sold to the Chinese.

“He is giving the impression that Johor is surrendering land to the Chinese and that we are giving up our sovereignty, comparing even how we gave up Singapore to the British,” The Star reported the sultan as saying in an interview at Istana Bukit Serene.

The sultan also pointed out that a large portion of Forest City would comprise condominiums that are to be built on reclaimed land.

‘Take a look at Singapore’

“I would like to ask Dr Mahathir if these foreign buyers can just take their apartments back home or carry off an inch of the reclaimed land.

“Take a look at the number of foreigners who have bought pro­perties in Singapore. Are the Singaporeans in that tiny island republic worried? No, they are not and they, in fact, welcome affluent expatriates there,” the sultan is quoted as saying.

The situation in Singapore, he said, was unlike Mahathir’s attempts to allegedly create fear using race for political motives.

“He (Mahathir) is not stupid, he’s just selfish and opportunistic,” Sultan Ibrahim added.

Commenting further, the sultan said that Forest City’s mixed development project was not targeted at Chinese investors, but for anyone around the world, inclu­ding Johoreans.

“This project will increase Johor’s land size and sovereignty,” he said in noting that the spill­over effect would include re­venue for the state go­vernment in terms of taxes and about 200,000 job op­­por­­­­tunities.

The sultan said this in response to a series of comments and blog posts by Mahathir, who had claimed that huge tracts of land around Johor Bahru were being sold to fo­­reigners with no restriction, and there would be mass immigration to take up residence in these new cities.

Mahathir had raised his concerns based on a Bloomberg report that claimed Forest City would accommodate 700,000 new houses upon its completion.

This was on top of 60 similar other projects within Iskandar Malaysia around Johor Bahru, which could add another 500,000 houses.

Posted in Iskandar Information | Leave a comment

Malaysia Secondary Market Continues to Drive the Way, Up Hopefully.

The secondary housing market moved the real estate business last year, accounting for around 80 percent of the country’s real estate transactions, reported New Straits Times.

“New projects account for between 20 and 25 percent. It is the secondary market that drove the market last year,” said Malaysian Institute of Estate Agents (MIEA) past president and chief trainer K. Soma Sundram.

In fact, the booming secondary market is expected to continue to move the property market this year.

On the market’s present condition, Soma Sundram explained that the property market, which is witnessing more supply than demand, is still finding its direction.

He noted that demand is based on various factors, such as financing and income level.

“Prices have gone up and it’s good that the market is going through this period,” he said. “It is now finding the balance where it should go from here on.”

Meanwhile, MIEA deputy president Eric Lim called for a stronger regulation and enforcement in order to curb the activities of illegal real estate agents.

He revealed that majority of the real estate agents registered under the Board of Valuers, Appraisers and Estate Agents Malaysia (BOVAEA) are found in clusters within Johor, Penang and the Klang Valley.

Since activities in other states are scarce, these illegal agents thrive on unregistered transactions, he said, adding that East Malaysian states has the highest number of illegal transactions.

He shared that the company had been educating the public on the dangers of dealing with illegal property agents.

“We try and educate the public not to respond to illegal signboards on the streets, not to deal with them as they are not registered,” said Lim, who also serves as chairman of the BOVAEA’s Estate Agency Practice Committee (EAPC).

“If at any moment the deal goes wrong, victims would not be able to recover their losses.”

According to Lim, EAPC has partnered with relevant government agencies in a bid to bring the illegal real estate agents to justice.

Posted in Iskandar Information | Leave a comment

Mathathir’s Views on Huge China Investments in Iskandar Malaysia

The present administration has attracted significant investments from China, but in return, it has given big land parcels where buildings that will be occupied by these foreigners will rise, claimed Former Prime Minister Mahathir Mohamad.

He said the bankruptcy of 1Malaysia Development Berhad (1MDB), whose funds where allegedly used for personal reasons by Prime Minister Najib Razak and his close associates, has forced the government to use valuable land as collateral to get foreign investments.

“Our heritage is being sold, our grandchildren won’t have anything in the future,” said Mahathir on Saturday during the launch of the opposition party he leads at an indoor stadium in Selangor, Shah Alam.

Mahathir’s four-month-old Parti Pribumi Bersatu Malaysia was officially approved as a registered political party in September 2016.

Aside from that, he reckoned that Malaysia’s demography would be affected by the substantial investments from abroad and gargantuan infrastructure projects.

In a blog post written last December, Mahathir said PM Najib’s plan for a railway line to connect the country’s capital with the states in the east coast will require many migrant workers to temporarily reside in Malaysia within a long period of time.

“They (China) will come with technology and workers from their country. Their workers, tens of thousands of them, must necessarily be based here, especially in Kelantan, Terengganu and Pahang.”

The construction of the RM55 billion East Coast Rail Link, which is funded by China, is expected to take seven years, he added.

Meanwhile, the 91-year-old Mahathir pledged to rescind the unpopular six percent Goods and Services Tax (GST) and stop all sales of huge assets to foreigners if the opposition parties win in the next general election, which is widely speculated to be called in 2017.

Posted in Iskandar Information | Leave a comment