Emerging Asian Property Markets

By: Pauline Felward

Property markets in South East Asia are emerging at a faster pace than ever, with buyers from the countries themselves and other developed Asian markets accompanying the usual western investor looking to expand their overseas property portfolio. While places like Thailand have already sought investor interest, we look further down the road at some of the potential growing markets in South East Asia over the next few years.

Property in Malaysia: As part of the British Empire until 1947, Malaysia continues to exhibit large amounts of UK influences - English is widely spoken, and much of the legal system is based upon English Common Law. A vibrant capital city in Kuala Lumpur shows a cosmopolitan side to the culture, and economically it benefits from having a number of different industries that all contribute to the success and stability of the region. The average GDP growth has been quoted at over six per cent across the past three years.

Further factors to attract overseas property investors include the fact that capital gains tax has recently been abolished, the ready availability of 70 per cent mortgages for foreigners, automatic residency for property owners, and 99 year renewable leases are the norm. There are some restrictions on what types and how many properties foreigners are allowed to buy in Malaysia, which prevent people buying up large portions of real estate. Generally-speaking, there is a limit of two properties for private foreign buyers, while permission for a third can be sought from the appropriate government department.

Buyers in Malaysia should always employ an independent legal representative to handle their transaction, and ensure full surveys are carried out before buying property in Malaysia. The property buying process usually involves a three per cent deposit upon the agreement of a sale, with a further seven per cent following within 14 days. Sales are normally then completed within three months of the signing of initial contracts, while legal fees are usually between one and three per cent of the purchase price.

Property in Philippines: A growth area for tourism, particularly from within Asia, the Philippines are expected to be one of the major beneficiaries of the growth in external travel by Chinese citizens in years to come. Capital growth is said to be 12-15 per cent on tourist-based properties in the Philippines, with similar figures being discussed for rental yields, though there is little data available to back this up. Golf is seen as one of the biggest growth areas for tourist residences.

Property in Mongolia: One of the fastest-growing economies in the region, parts of the country are being targeted by mining and oil companies as the next region for exploitation. These businesses are creating the rental demand, which is in some cases being quoted at around 13 per cent, while GDP growth in the country is said to be above seven per cent and rising rapidly.

Capital appreciation is possibly the most exciting part of buying property in Mongolia, and is said to be in the region of 30 per cent per year for high-end apartments. Due to the fact that the property market here is in its infancy, interest rates are very high, so Mongolia should only really be considered as a cash purchase.

Property in Singapore: Recognised in the past as one of Asia's tiger economies, Singapore suffered from outbreaks of the SARS virus in recent years, which dented the economy quite seriously, with tourism coming almost to a standstill, and retail sales plummeting by around 80 per cent.

There have been signs of recovery in Singapore's property market, and with historic attractions and the glamour of the Raffles Hotel, the country is in a good position to come back strongly.

Official government statistics suggest strong growth at present, with a rise of over six per cent in resale process in the third quarter of 2007.

Property in Cambodia: With a polemic recent history, Cambodia has recently emerged from some 40 years of international isolation, and is beginning to come to the attention of overseas property investors. There is no doubt that there are risks in investing in Cambodian property, but for those who are prepared to get involved at the ground level, there is huge potential for profit and development, so long as the investment matches with your attitude to risk.

Inflation is low and GDP growth high in Cambodia, creating ideal conditions for economic development. Coupled with a FDI growth of up to 450 per cent in some recent years, this is bound to interest many property investors.

Land and property ownership in Cambodia is high, due to the land distribution that took place under the communist regime in the past. However, investment in property is rare, and with the large number of Khmer returning to Phnom Penh following the political reforms that have taken place are fuelling a huge increase in demand for rental property in the capital.

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