JULY & AUGUST 2012 |
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area is thriving and successful people want to put some of their assets in real estate. They will probably have already bought real estate in their own country and are now looking to diversify by buying in neighbouring countries. Some may also be buying elsewhere in the world, particularly those operating at the top of the market, but for many buyers these investments are their fi rst foray into the world of international property.” How much activity is he seeing
from outside the region? “More and more. It is still a relatively small percentage of the total but it is getting to be a bigger percentage every month. In certain part of the region the Chinese are showing quite a lot of interest, particularly at the top end of the market. For example, in Singapore the Chinese are now the second largest group buying expensive properties. “Other nationalities who are active include the British and Irish (though, for obvious reasons, they are now buying less than they used to) and there is other interest from Western Europe and the United States.”
How do the people buying react in the face of the legal and administrative diffi culties associated with buying properties in some parts of this region? Do they just accept it as ‘the way it is’ or are they deterred?
“There are, of course, problems associated with buying holiday homes in some of the countries in this area. In particular, there is the ban on foreign individuals directly owning property.” Andrew says that in Thailand, Indonesia and Vietnam this is being sorted out and that he anticipates a lot more activity once this has happened. “In Bali there are already zones where foreigners can acquire property, while in Malaysia the My Second Home program is being changed to raise the barrier against foreign ownership – largely as a result of local pressure to protect the local housing market.
“Buyers seem to ignore or adjust to these problems. Most of them are manageable and buyers are probably more interested in the signifi cant returns that they feel are available than these issues which many would consider purely technical.”
Despite the limitations, these markets are booming. “There is just no comparison between the situation today and the situation when I fi rst came to live in Thailand back in 2006.”
What are the big issues affecting these markets?
In Singapore there are a number. One causing a lot of local concern is the size of the units.
Increasing land prices and
construction costs have led developers to build apartments that are getting smaller and smaller. Some are little more than shoeboxes. “I have recently
THE LAST WORD Developer profi le
seen a 21 square metre apartment on sale for £23,000. Remember that this is intended as a permanent home, not as a pied-a-terre or holiday accommodation.” Of course, Singapore is not alone in experiencing this phenomenon but there are local calls for regulation.
Prices in Singapore have come off a little and volumes are down by about 30% compared with their peak. This is probably as a result of two unconnected factors. The fi rst is that overseas buyers are down a little (but still exceed 400 per month which, in a relatively small market, is quite signifi cant – especially when they tend to be buying at the top end of the market). The second is that Singaporeans have discovered overseas property. Much of the local investment money that was going into property in Singapore has now moved into other regional markets.
Andrew considers that prices are probably now more or less at the top, certainly for the time being. In Singapore the government exercises tight control and, because of the local political system, it is able to do so very effectively. If they want to stimulate the market but put a damper on prices they will release more land. If they want to limit the market they can apply protective measures such as imposing
“Activity from outside the region is accounting for a bigger percentage each month”
addition Capital Buyers Stamp Duty on foreign buyers and second homes. Refl ecting the new Singaporean
interest in property elsewhere there are now huge numbers of foreign property exhibitions. “Eight, 10 or 12 will take place every weekend. Remember that the population is only 5 million people. Exhibitors come from London, Malaysia, Canada, Australia, Thailand, India, the US and many other places. They offer everything from regular apartments to student accommodation and distressed property. These exhibitions are very expensive to put on, yet the sales obviously make them worthwhile.” How do the Singaporeans react to all these people pedalling property? “They seem excited by it. They seem excited by the fact that, for the fi rst time, they have signifi cant wealth to invest and they seem excited at the range of opportunities available to them and the potential for growth that they see all around them.
“There is a buzz in Singapore and I
don’t think it’s going to go away. “In Malaysia there is concern that foreign buyers are pushing up prices, but this seems very likely to continue. Malaysia has offered a 10-year
Looking abroad | more Singaporeans are taking an interest in overseas property
residence visa for certain categories of buyer, which will be hugely popular in China and the Middle East, and it is extending the mass-transit system so that people will be able to live in much cheaper housing and yet commute very easily to Singapore.”
This could be hugely signifi cant. In Europe, one of the places that grew most rapidly in value was Bratislava and a large part of that growth was fuelled by the ability of people living in Vienna, only 30 miles away, to buy property far more cheaply in Slovakia and then commute on the brand new motorway network. “Yes. This is a very exciting development for Malaysia. It will need to be managed carefully, particularly when it comes to making sure there is an adequate supply of the right property.
“There is already too little supply
for local people and this is likely to get worse.”
Thailand has already seen a large increase in prices and some suggest that there is a bubble forming. Andrew doesn’t think so. “There is strong demand and plenty of supply. Foreigners are back as buyers and yet their infl uence is very localised. In Bangkok less than 5% of sales involve foreigners.” As to the future, Andrew has one major reservation: “The Thais cannot be complacent. There is now a lot of competition in the market, with new places opening up that offer much of what Thailand has to offer – particularly in terms of beaches and the ‘tropical paradise environment’ at prices that are much cheaper and where living costs or the costs of a holiday are also going to be much lower.” One such place is Vietnam. This is presently held back by restrictions on foreign ownership but it is likely that these will be relaxed. In the meantime,
there is a lot of activity from ex-pat Vietnamese – those who went to live in other parts of the world in the aftermath of the Vietnam war. Andrew is excited about the prospects in Vietnam. “It is cheap. It is really nice. It is attractive.” Certainly, looking at it from the perspective of someone in Western Europe, there seems to be a huge amount of interest in Vietnam – both as a tourist destination and as a place to invest. “Yes, the trigger for expansion of this market will be the Government sorting out the legal and administrative issues that presently tend to get in the way of a property purchase.” Another place with prospects is
Cambodia. It, too, presently has legal issues but it is likely to open up to individual foreign investment and become another major player in the region. Cambodia is probably the next country where we will see lots of activity. What does Andrew think will be the main characteristics in the next year? “In Thailand, I think that prices will rise and that we will see more overseas buyers. In Indonesia, I think we will see more wealthy locals looking overseas. In Malaysia, we will see the government taking action to cool property prices and limit activity by foreign buyers. Vietnam will open up. Cambodia will increase the supply of available land, so reducing what are presently very high prices and Singapore will be fl at. ” Given all of these factors and his obvious enthusiasm for both the region and the market, Andrew may well help PropertyGuru achieve its ambitious targets. Does Andrew have any regrets about relocating to the Far East? None. “I enjoy working in the property industry and I can’t think of a better place to do it or a nicer group of people to work with.”
INTERVIEW | 63
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