Jakarta, Singapore, KL top for property
A new report ranks Jakarta, Singapore and Kuala Lumpur among the top five real estate investment markets out of 22 in Asia-Pacific, along with Shanghai and Sydney.
The report, entitled Emerging Trends in Real Estate Asia-Pacific 2013 was issued by the Urban Land Institute, a non-profit research and education organisation with offices in Washington, Hong Kong, and London, and PricewaterhouseCoopers on December 11.
It provides an overview of Asia-Pacific real estate investment and development trends, real estate finance and capital markets, and trends by property sector and metropolitan area.
The top five investment markets for 2013 are, according to the study:
1. Jakarta
Topping the rankings for both investment and development for the first time, Jakarta is described as a “surprising” choice given the city’s lack of investment grade stock and its economy, which while growing, lacks the enterprise, scale and infrastructure of its more developed neighbors. However, Jakarta is seen by many real estate professionals as the most favourable emerging market in the region, with business transactions generally easier and more transparent than in other frontier markets such as Vietnam. The country’s interest rates and inflation are stable, the gross domestic product is growing steadily, and foreign direct investment grew by 39 per cent in the first half of 2012. Demand for property in Jakarta is strong, resulting in year-to-year office rents leaping by 29 percent. Despite some challenges, such as difficulties securing bank debt and locating reliable local partners, Jakarta holds significant promise.
2. Shanghai
Shanghai’s office market and retail market have proved mainstays for foreign funds looking to invest in Chinese real estate. Both sectors remain popular, given the city’s relatively user-friendly business environment, growing volume of institutional grade properties and historic market performance. However, in spite of Shanghai’s strong ranking, the city is not as appealing to foreign investors as it was a few years ago. Prices are considered to be relatively high, the market has become saturated, and Chinese regulators have become less open to foreign investment, as they have increasing confidence in the ability of local real estate practitioners to finance and develop properties. While Shanghai will remain firmly on the radar of foreign funds with a mandate to invest in China, activity in the city will remain muted for the short term.
3. Singapore
Singapore retains its popularity among real estate investors who see the market as a safe haven offering solid, but not spectacular, returns that are underpinned by the city’s position as a global financial hub. The city’s office market has recently run out of steam with significant amounts of new Grade A office space drawing tenants away from existing buildings, a problem which is compounded by a shrinking head count in the local financial sector. Rising vacancies and falling rents are causing problems for some international funds looking to exit the market.
4. Sydney
Sydney has seen a limited amount of new supply of commercial space in recent years, although a significant amount of office and retail space is in the pipeline for 2015. A shortage of institutional grade property has continued to suppress sales volumes and kept prices buoyant, driving up total returns for office assets. Australia has absorbed more international real estate investment over the past year than any other country in the Asia Pacific region. Office assets remain a popular target for these funds and some analysts believe that foreign investors account for 30 per cent of the transactions in the sector.
5. Kuala Lumpur
Kuala Lumpur is beginning to enter the real estate limelight, offering a stable market with good opportunities for opportunistic returns. While property sales slowed noticeably in most Asian markets during the third quarter of 2012, Kuala Lumpur was the exception. The long-term prospects for the commercial property market are deemed by many to be strong, due to the success of the government’s Economic Transformation Programme in drawing foreign investment.
Other cities ranked in ASEAN were Bangkok (6th) and Manila (12th). Last on the 22-cities list is Osaka, Japan.
Asia-Pacific’s Top 15 Asian Investment Prospects for 2013
1. Jakarta, Indonesia
2. Shanghai, China
3. Singapore, Singapore
4. Sydney, Australia
5. Kuala Lumpur, Malaysia
6. Bangkok, Thailand
7. Beijing, China
8. China – secondary cities (Chongqing, Tianjin, Shenyang)
9. Taipei, Taiwan
10. Melbourne, Australia
11. Hong Kong, China
12. Manila, Philippines
13. Tokyo, Japan
14. Seoul, South Korea
15. Guangzhou, China
[caption id="attachment_5813" align="alignleft" width="300"] Singapore's property market retains its attraction[/caption] A new report ranks Jakarta, Singapore and Kuala Lumpur among the top five real estate investment markets out of 22 in Asia-Pacific, along with Shanghai and Sydney. The report, entitled Emerging Trends in Real Estate Asia-Pacific 2013 was issued by the Urban Land Institute, a non-profit research and education organisation with offices in Washington, Hong Kong, and London, and PricewaterhouseCoopers on December 11. It provides an overview of Asia-Pacific real estate investment and development trends, real estate finance and capital markets, and trends by property sector and metropolitan area. The top...
A new report ranks Jakarta, Singapore and Kuala Lumpur among the top five real estate investment markets out of 22 in Asia-Pacific, along with Shanghai and Sydney.
The report, entitled Emerging Trends in Real Estate Asia-Pacific 2013 was issued by the Urban Land Institute, a non-profit research and education organisation with offices in Washington, Hong Kong, and London, and PricewaterhouseCoopers on December 11.
It provides an overview of Asia-Pacific real estate investment and development trends, real estate finance and capital markets, and trends by property sector and metropolitan area.
The top five investment markets for 2013 are, according to the study:
1. Jakarta
Topping the rankings for both investment and development for the first time, Jakarta is described as a “surprising” choice given the city’s lack of investment grade stock and its economy, which while growing, lacks the enterprise, scale and infrastructure of its more developed neighbors. However, Jakarta is seen by many real estate professionals as the most favourable emerging market in the region, with business transactions generally easier and more transparent than in other frontier markets such as Vietnam. The country’s interest rates and inflation are stable, the gross domestic product is growing steadily, and foreign direct investment grew by 39 per cent in the first half of 2012. Demand for property in Jakarta is strong, resulting in year-to-year office rents leaping by 29 percent. Despite some challenges, such as difficulties securing bank debt and locating reliable local partners, Jakarta holds significant promise.
2. Shanghai
Shanghai’s office market and retail market have proved mainstays for foreign funds looking to invest in Chinese real estate. Both sectors remain popular, given the city’s relatively user-friendly business environment, growing volume of institutional grade properties and historic market performance. However, in spite of Shanghai’s strong ranking, the city is not as appealing to foreign investors as it was a few years ago. Prices are considered to be relatively high, the market has become saturated, and Chinese regulators have become less open to foreign investment, as they have increasing confidence in the ability of local real estate practitioners to finance and develop properties. While Shanghai will remain firmly on the radar of foreign funds with a mandate to invest in China, activity in the city will remain muted for the short term.
3. Singapore
Singapore retains its popularity among real estate investors who see the market as a safe haven offering solid, but not spectacular, returns that are underpinned by the city’s position as a global financial hub. The city’s office market has recently run out of steam with significant amounts of new Grade A office space drawing tenants away from existing buildings, a problem which is compounded by a shrinking head count in the local financial sector. Rising vacancies and falling rents are causing problems for some international funds looking to exit the market.
4. Sydney
Sydney has seen a limited amount of new supply of commercial space in recent years, although a significant amount of office and retail space is in the pipeline for 2015. A shortage of institutional grade property has continued to suppress sales volumes and kept prices buoyant, driving up total returns for office assets. Australia has absorbed more international real estate investment over the past year than any other country in the Asia Pacific region. Office assets remain a popular target for these funds and some analysts believe that foreign investors account for 30 per cent of the transactions in the sector.
5. Kuala Lumpur
Kuala Lumpur is beginning to enter the real estate limelight, offering a stable market with good opportunities for opportunistic returns. While property sales slowed noticeably in most Asian markets during the third quarter of 2012, Kuala Lumpur was the exception. The long-term prospects for the commercial property market are deemed by many to be strong, due to the success of the government’s Economic Transformation Programme in drawing foreign investment.
Other cities ranked in ASEAN were Bangkok (6th) and Manila (12th). Last on the 22-cities list is Osaka, Japan.
Asia-Pacific’s Top 15 Asian Investment Prospects for 2013
1. Jakarta, Indonesia
2. Shanghai, China
3. Singapore, Singapore
4. Sydney, Australia
5. Kuala Lumpur, Malaysia
6. Bangkok, Thailand
7. Beijing, China
8. China – secondary cities (Chongqing, Tianjin, Shenyang)
9. Taipei, Taiwan
10. Melbourne, Australia
11. Hong Kong, China
12. Manila, Philippines
13. Tokyo, Japan
14. Seoul, South Korea
15. Guangzhou, China
Some of the countries at the top are very interesting and I am not sure investing in KL or Singapore would be a wise choice as the government clearly is trying to cool the real estate markets by intervening. The prices have climbed way too fast and half the apartments are sitting empty in KLCC and KL Sentral for years as the investors wait to flip at a higher price.
Urbanisation in Asian countries is catching up fast… in fact, by the year 2030 it will be almost on par with developed countries.. there is great potential.
Research by Centuryland Management, a professional service in real estate consultancy and project development. Email: info@centurylandmgt.com