The future of Southeast Asia’s real estate

By iProperty.com Singapore – November 15th, 2010

 

(Singapore at night. Photograph: Singapore Tourism Board)

The Southeast Asian property market is one of the world’s most resilient, and one poised for further growth in 2011. iProperty.com speaks to Al Mendoza, Managing Director, Asia Pacific, of real estate brokerage firm Intero Asia Pacific, for his views on the property market in the region.

iProperty: How do you view the current real estate market climate in the region?

Mendoza: Overall, the Asia Pacific market climate is very positive. There are nearly three billion people and several million home sales annually in the region.

Hong Kong

The housing price index rose over 13% and sales numbers have steadily increased. The country has benefited from an influx in buyers and investors from mainland China, a series of stimulus packages from the government and relatively low interest rates which all have contributed to the rise in prices. The housing market in Hong Kong took a hit during the global financial crisis, but after falling 17% from June-December 2008, the residential price index rebounded and rose by 20% from the previous year’s bottom, according to the Ratings and Valuation Department (RVD).

Singapore

The country remains a central gateway for the region, and has experienced a complete turnaround from reports and prospects earlier this year. Property prices have continued on an upward trend, expected to close 2009 on a strong note. Further, sales of new luxury developments in Singapore’s reclaimed areas on the offshore island of Sentosa, where prices average SGD2,000-SGD3,500 per square foot, are reported to be steady.

Malaysia

Investors and expatriates have been flocking there due to a low cost of living and mild weather. Federal incentives designed to draw foreigners have been beneficial for investors in recent months, and while other countries in the region have experienced price declines as a result of the financial crisis, Malaysia’s properties have remained steady. Malaysia’s advantage is that current interest rates are at a 25 year low and developers of new buildings have been more flexible and willing to throw in incentives at no additional cost.

iProperty: You mention Malaysia, Singapore and Hong Kong. Where would the key real estate growth areas be for these places?

Mendoza: Hong Kong’s growth areas would be in the luxury markets, where foreign investors, particularly from mainland China buy with cash, and across rental properties, which have enjoyed a good margin with rental income for investors. So, for Hong Kong I feel there would be a strong showing across residential and commercial properties.

I predict that in Singapore, foreign investors in commercial properties, as well as a new, young generation purchasing residential units and homes will keep the market steady, if not drive it up. Singapore is facing another record year of sales volume, and this goes across residential, commercial and industrial.

Malaysia is still on a push to promote itself as an international retirement destination, is likely to revamp its Malaysia My Second Home (MM2H) program. The MM2H program, which attracted over USD1 Billion to the property sector in total, is now looking beyond the average retiree or international property buyer, and is going after high net-worth individuals who may be willing to invest large amounts of capital into the economy. I would see the primary growth area here to be residential.