Overseas property investment – Banking on Bangkok

What investors typically look in an overseas property investment opportunity are the political and economic stability of the country, the country’s geographical position, the provision of infrastructure, the rigidity and scope of foreign investment regulations and the potential for growth.

The Surawong

Photo: The Surawong (Photo credit: Chewathai)

In South East Asia, Bangkok ticks many of the boxes for foreign investors, in spite of their recent military rule. Many multi-national companies (MNCs) have set up shop there, and the transportation and industry infrastructure is considerably established. Connectivity is high and industrial and office spaces are sufficient.

While many parts of Thailand’s capital city remain yet underdeveloped, the potential for growth in the long-term could be immense. They have attracted a great deal of investment from Japan and China over the years, and regional investors have also followed suit. Properties along the well-known Silom road have been appraised at 1 million baht per 4-sq-m and land prices in Bangkok have rose 15.8 per cent over the last 4 years.

Plaza Athenee1Though prices are now higher than 5 years ago, there is still space for growth and there are many new condominiums and office blocks springing up all over the city. Near the Sala Daeng BTS station, a 52-unit apartment project, The Surawong, is set to draw in investors with their prime location and competitive pricing. Developed by Chewathai Hup Soon Ltd, which is a joint-venture between residential property developer Chewathai and United Motor Works Siam Co Ltd, a subsidiary of Singapore-based real estate giant Hup Soon Global Corporation Plc, it was launched in 2009 and completed in 2010.

In Pathumwan, the CEO Suite Thailand Plaza Athenee is offering up prime office spots for rent, with flexible lease periods to suit all needs, from small and medium-scale enterprises to MNCs. Considered a Grade A+ building, Plaza Athenee is conveniently located just a few minutes’ ride away from the Bangkok International Airport and the CEO Suite is located on the 23rd floor where views of Bangkok’s skyline fill the windows.



Cambodia’s property market boom

Though previously a few steps behind her other Southeast Asian comrades, Cambodia is slowly but surely catching up in its cultural and financial sectors. With 74 per cent of its citizen literate and aged between 20 and 34 years old, the country is set to move only upwards in economic growth.

TheGatewayCambodiaPhoto: The Gateway mixed-use development in Phnom Penh, Cambodia

This is clearly reflected in the growing interest from investors, attracted by the strong and growing labour force with a high literacy rate, and the potential space for growth. As shifts in the Foreign Ownership Property Law now favour foreign buyers, Cambodia’s real estate market has boomed in recent years. Non-citizens can purchase up to 70 per cent of a freehold, leasehold or concession condominium development, of units above the ground floor. They are not however allowed to own land.

Property rental yields are high on the list of returns investors can look forward to. It has been reported that a 8 to 10 per cent ROI is not uncommon. Land prices are already rising quickly, especially in Phnom Penh. And investors are responding positively to well-developed properties with modern designs and good locations, such as the 39-storey mixed-used project, The Gateway, located in the capital city’s Central Business District. Investors can look forward to high capital gains in the long-term as the government continues to commit to developing infrastructure and

Lull in private home prices

Despite a projected lull in local private home prices this year, interest in Singapore’s property market remains steady as prime residential property prices are still 165 per cent and 92 per cent lower than those in Hong Kong and London respectively.

 Photo credit: Singapore Tourism Board

So despite property analysts predicting a 5 to 10 per cent fall in prime and mass market private property prices this year, the local property market’s core remains strong. 2010’s property cooling measures may have kept property prices 17 per cent lower than what it could have been. Private home prices have fallen 4 per cent last year, following a 3.7 per cent fall in 2014. In the luxury home market, prices have fallen 20 per cent since the Additional Buyers’ Stamp Duty (ABSD) was implemented in 2011.

China’s recent growth slump, plunging oil prices, the Federal Reserve interest rate hike and a general sense of a global recession looming, might consequently affect the property markets around the world. Businesses may reconsider their expansion plans, which could mean a fall in demand for office spaces and commercial properties. This in turn may affect the number of expatriates entering the country, which may also affect rental prices.

This year could prove tough for investors and property sellers, but not without glimpses of hope. 2016 may be the year to hang-in-there, but industry experts are expecting 2017 to take a turn for the better.

Australia’s property and housing market feels the chill

Tighter loan restrictions and a supply glut – these issues may not be affecting only Singapore’s property market. It seems in Australia, the same has threatened to shake the markets.

SYdney PropertyPhoto: Sydney

Property prices which were soaring, especially in major Australian cities such as Sydney and Melbourne, have now come down, as the approval for multi-unit properties have fallen 12.7 per cent last November. Developers of high-rise, multi-unit properties have found it harder to secure approvals as a supply glut looms in the near horizon.

The banks have also tightened their lending, and new regulations have made it more difficult for foreign investors to pick off large number of properties. This in turn has affect the construction industry in Australia, and have come at an most unfortunate time as the government has hoped it will plug the hole left behind by the lagging mining industry.

That said, there are still many considerable new properties which are highly valuable. Most importantly, they need to fit well with the investor’s or buyer’s needs and portfolio. Factors such as financial feasibility and longevity, short- and long-term leasing potential and margin of development of the district will continue to guide investors in making their purchasing decisions.

More buying into Southeast-Asian properties

Beside the usual countries in Asia such as Hong Kong and Japan, whose property industry has been flourishing for many years now, the market in Southeast-Asia (SEA)  is also increasingly on the up.

Vietnam has recently opened up their market to foreign buyers, and the effects are obvious as buying sentiment has largely increased over the last year. Foreigners were previously only able to purchase one property, and had to first have a work permit in order to do so. Now, they are allowed to buy, hold, occupy or lease out more than one property. Property developers are now allowed to also sell their properties outside of Vietnam, which increases the pool of potential buyers tremendously. Property analysts have since seen a rise in the number of foreign buyers, in particular from Korea, Japan, Singapore and Malaysia, most of whom work in Vietnam.


Photo credit: Keppel Land.

As with most major cities, the property market in Ho Chi Minh has benefitted from these legislative changes; properties in districts near International schools or Multi-National Companies (MNCs) are particularly popular. Developers have also been launching more units in Ho Chi Minh, with 10,114 new units in 26 projects launched in the last quarter alone.

For example, Keppel Land will be launching the second phase of its project in Ho Chi Minh City – Estella Heights, soon. Prices will be starting at $288 psf, which makes an $150,000 unit more than affordable for buyers or investors. As Vietnam continues to integrate globally, the potential for growth is immense, and investors taking the opportunity to enter the market early may be able to see yields soon.

Should the ABSD be removed?

ABSD – Additional Buyer’s Stamp Duty. Though mentioned less this year as other property cooling measures take over in significance, this nevertheless is a rather big hump investors have to get over should they wish to purchase properties for investment purposes.

Implemented in 2011 by the Monetary Authority of Singapore (MAS), it applies to foreign investors, Singapore PRs (permanent residents) purchasing their second and subsequent properties and Singaporeans purchasing their third and subsequent properties. This and other property cooling measures have successfully curbed the blossoming of a potential housing bubble which threatened to grow in 2009 and 2010. Combined with the Seller’s Stamp Duty (SSD), of up to 16 per cent, property speculation is significantly lower than before. The highly affluent are rarely affected but it has helped keep individuals relatively debt-free.

SantoriniAnother positive that came out of the previous couple of years of policy adjustments is more transparent industry practices. Developers are now required to submit weekly transaction data to the Controller of Housing, including incentives provided to buyers such as furniture vouchers, cash rebates, stamp fee or legal fees absorption and sales volume. That will help project a truer image of how the industry is fairing and what are the actual market prices and keep pricing more realistic.

The restrictive loan-to-value limit has perhaps affected the industry a tad more as it has brought prices down and maintained a level playing field. Whether the government has brought property prices to a level affordable for majority of Singaporeans is yet to be seen clearly, but with the recent election just over, all eyes could be on the new government to see what else they can or will do.

Rising property market – Vietnam

With a communist government, most would not have considered Vietnam potential ground for a thriving real estate market. Their property market suffered a severe blow about 4 years ago when property bubble burst, leaving banks in debt and buyers and developers defaulting on their loans.


Photo Credit: Phuoc Thanh Construction

But 4 years on, the government has injected stimulus into the real estate sector of up to US$1.4 million and has also restructured their banking sector to ensure history does not repeat itself. In fact, they have gone even further to relax rules on foreign investment money coming through their borders. Foreign firms, individual buyers as well as Vietnamese who have left the country during the war in 1975 – the Viet Kieu, are now able to purchase properties in Hanoi. And response has been overwhelming. One developer, Vingroup, reported a whooping 112 deposits on apartments within 2 hours of their launches specifically targeting foreigners and Viet Kieu.

Most foreign firms are keen to purchase properties to house their foreign staff. Intel and Samsung, which are situated in the Saigon Hi-Tech Park, are just a couple of the many international firms snapping up properties. Average prices of high-end apartments in the southern commercial hub go up to as much as US$1,800 per sq m. In the capital, prices are around $1,600, a number familiar to the property players before the last housing crisis. With a market value of US$21 billion, Vietnam’s real estate sector still has a way to go compared to Singapore’s US$241 billion, but that difference could be what most attracts investors.

Cluster landed homes – The next goldmine?

Landed homes have always been known to be one of the most expensive properties in land-scarce Singapore and understandably so. And most would think that properties with individual land titles will always be a step ahead of leasehold properties. But apparently strata landed properties, or more commonly known as cluster landed homes, have seen the fastest price rise over recent years.

The four types of landed properties in Singapore are:

  • Leasehold non-strata landed homes
  • Freehold non-strata landed homes
  • Leasehold strata landed homes
  • Freehold strata landed homes

Casa FidelioAnd the last one on the list above have seen speedy rise in value of 77.3 per cent from 2004 to 2008. And the third on the list have been even more popular since 2009, with the fastest rise in capital value of 20.1 per cent a year. This could be due to the fact that most of these cluster homes have been built in the last decade or so, and have better floor planning and a larger floor area due to the fact that they are often built up to at least two storeys. Some older freehold landed properties may come with a land deed, but often extensive renovation have to be done, which raises the cost for the buyer.

Hillcrest-VillaPhoto credit: MCL Land

Examples of the price rise in freehold cluster housing properties can be seen at the Casa Fidelio in Siglap. In 2004, a terraced house cost only $760,000 and by 2008, it was sold for $1.18 million. In 2007, the launch of the Hillcrest Villa in Bukit Timah also pushed prices of cluster landed homes up by almost $1.5 million. Though landed properties are one of the highest profit-earning tickets out there, the cost of such properties in today’s market will require a healthy bank balance and deep pockets. What options are there out there for buyers who wish to invest in such properties?