Looking East: Property buyers place their bets on ASEAN

Reading Time: 2 minutes

On the outlook for investment opportunities, the Southeast Asian market has recently come on the radar for Gulf real estate investors. No surprise. Despite their booming economies, Gulf Cooperation Council countries are partly facing issues with over-liquidity and oversupply on the property market which is both not helping the sector and is continuously putting pressure on yields.

by Arno Maierbrugger

There is an alternative. Looking beyond borders, the property markets in certain Southeast Asian nations look promising for the years to come. With all of the ASEAN members, except Singapore, forecast to reach GDP growth in the 4-8 percentage figures in 2013 and remain on this healthy level at least another couple of years, the property market is highly likely to grow at a similar pace on the grounds of rising demand, increasing investment activity and still fairly reasonable pricing.

But which country to target? In the past, Singapore was the first choice for property investors in ASEAN. The city state’s property market is still robust, but, however, has decelerated due to a slowing economy, tighter regulations on lending and the highest real estate prices in the region. Thus, investors did look elsewhere and identified Malaysia and Thailand as new emerging real estate havens.

Especially Malaysia, with current square meter prices for metropolitan prime property of between $3,500 and $5,000, has high potential and is also a market where Muslim investors find themselves at home. The country is safe and stable, connectivity is excellent and the growth potential cannot be overlooked.

Similar in Thailand, where property prices are even lower at around $3,000  per square meter for prime property. Buying condos in Bangkok will remain a trend for the long term, especially one-bedroom units near mass-transit stations. As long as the number of units entering the market is in line with the growing working population in Bangkok, rising income of the middle-class will continue to support this trend.

Regional property experts have now also begun to praise the booming Cambodian real estate market. A country which is in high growth mode with a stabilised political environment and is almost starting from scratch in terms of property development, investors might find excellent deals at prices of around $2,000 to $2,500 per square meter for prime property. With more than 2,000 new private residential units to go on sale in 2013 at these reasonable prices, Cambodia is likely to generate attractive returns in the long-term.

A good sign is also that more Singapore buyers have entered the Cambodian property market, investors who are known as being savvy and risk-conscious.

As for other ASEAN countries, it is recommended that investors stay on the sidelines and watch developments closely. Vietnam is currently going through a real estate slump, Myanmar has no clear regulations yet for private property investors, Indonesia’s real estate market still seems to be too intransparent, the Philippines despite its booming economy is too far off to develop a vibrant foreign-funded property market, Laos offers no real choices and Brunei is too small.

This comment is part of Inside Investor’s weekly column series in Qatar’s leading newspaper Gulf Times and is published every Sunday.

Gulf Times

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On the outlook for investment opportunities, the Southeast Asian market has recently come on the radar for Gulf real estate investors. No surprise. Despite their booming economies, Gulf Cooperation Council countries are partly facing issues with over-liquidity and oversupply on the property market which is both not helping the sector and is continuously putting pressure on yields. by Arno Maierbrugger There is an alternative. Looking beyond borders, the property markets in certain Southeast Asian nations look promising for the years to come. With all of the ASEAN members, except Singapore, forecast to reach GDP growth in the 4-8 percentage figures...

Reading Time: 2 minutes

On the outlook for investment opportunities, the Southeast Asian market has recently come on the radar for Gulf real estate investors. No surprise. Despite their booming economies, Gulf Cooperation Council countries are partly facing issues with over-liquidity and oversupply on the property market which is both not helping the sector and is continuously putting pressure on yields.

by Arno Maierbrugger

There is an alternative. Looking beyond borders, the property markets in certain Southeast Asian nations look promising for the years to come. With all of the ASEAN members, except Singapore, forecast to reach GDP growth in the 4-8 percentage figures in 2013 and remain on this healthy level at least another couple of years, the property market is highly likely to grow at a similar pace on the grounds of rising demand, increasing investment activity and still fairly reasonable pricing.

But which country to target? In the past, Singapore was the first choice for property investors in ASEAN. The city state’s property market is still robust, but, however, has decelerated due to a slowing economy, tighter regulations on lending and the highest real estate prices in the region. Thus, investors did look elsewhere and identified Malaysia and Thailand as new emerging real estate havens.

Especially Malaysia, with current square meter prices for metropolitan prime property of between $3,500 and $5,000, has high potential and is also a market where Muslim investors find themselves at home. The country is safe and stable, connectivity is excellent and the growth potential cannot be overlooked.

Similar in Thailand, where property prices are even lower at around $3,000  per square meter for prime property. Buying condos in Bangkok will remain a trend for the long term, especially one-bedroom units near mass-transit stations. As long as the number of units entering the market is in line with the growing working population in Bangkok, rising income of the middle-class will continue to support this trend.

Regional property experts have now also begun to praise the booming Cambodian real estate market. A country which is in high growth mode with a stabilised political environment and is almost starting from scratch in terms of property development, investors might find excellent deals at prices of around $2,000 to $2,500 per square meter for prime property. With more than 2,000 new private residential units to go on sale in 2013 at these reasonable prices, Cambodia is likely to generate attractive returns in the long-term.

A good sign is also that more Singapore buyers have entered the Cambodian property market, investors who are known as being savvy and risk-conscious.

As for other ASEAN countries, it is recommended that investors stay on the sidelines and watch developments closely. Vietnam is currently going through a real estate slump, Myanmar has no clear regulations yet for private property investors, Indonesia’s real estate market still seems to be too intransparent, the Philippines despite its booming economy is too far off to develop a vibrant foreign-funded property market, Laos offers no real choices and Brunei is too small.

This comment is part of Inside Investor’s weekly column series in Qatar’s leading newspaper Gulf Times and is published every Sunday.

Gulf Times

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