Myanmar – Immense growth potential for property investments

While still battling a history of military rule, political censorship and restrictions, Myanmar has been gradually warming up to the rest of the world ever since its political reform in 2011 and the reception of foreign investment in 2012.

GOldenCity1

Photo credit: D3 Capital

Regional and global investors have been slowly exploring investment opportunities in the country and have found that it is a wealth of resources. Similar to China when the country first opened up, where folks had cash to spend but nowhere to spend them as it is not yet as developed as other Asian or Asean countries, the potential for growth is immense. Singaporean investors have also been seriously looking into the country for opportunities and properties have been sprouting rapidly.

D3 Capital, run by Daphne Teo, an ex-national swimmer who used to represent Singapore in her teens, has been developing mixed-used luxury project – Golden City – in Myanmar since 2014. Come 2018, the rare piece of land near the Inya LakeShwedagon Pagoda and University of Yangon, will see an amalgamation of some of the country’s tallest skyscrapers housing a hotel, serviced residences, plus offices and retail units. Consisting of ten 33-storey towers and a 6-storey block, it will also hold 100,000 sq ft of greenery and gardens and will be valued at approximately S$960 million.

CambodiaPropertyIf Cambodia and Vietnam, which have both had a head-start in the property investment market, are anything to go by, Myanmar will be a worthy contender for the fastest growing country in South-east Asia.

Banking on Shophouses

Who would have knew half a century back that the humble shophouse would be worth millions today. As their numbers decreased and rarity grew, so did their value. If a few millions would have gotten you baulking a few years back, the most recent $10.8 million, approximately $3,750 psf, for an Ann Siang road shophouse would have you out of your seats by now.

AmoyStreet ShophouseForeigners and wealth funds are increasingly looking into investment opportunities in these rare commodities, especially those in the central business district (CBD). Shophouses’ popularity amongst the rich and affluent have leapfrogged in the past couple of decades despite rental prices having stayed stagnant. As some of these wealth funds are under pressure to utilise capital and expand portfolios, foreign purchases of shophouses in District 1 and 2 have picked up over the past couple of years. 99-year leasehold shophouses are now going for close to $3,000 psf.

Though the commercial leasing market has been on the downhill slide, tenants are still more willing to fork out say $18,000 for a renovated shophouse unit as compared to the higher rents in Grade A offices or shopping malls. It comes as no surprise then, that 2 shophouses in Pagoda street wold for $24.2 million at around $2,800 psf; and another 6 units in Amoy street went for $20.25 million or $2,411 psf to a Chinese and a Spanish investor respectively. The continued interest in this market segment will continue well into the year and next, as prices have risen by 10% despite a fall in transaction volume last year.

 

China real estate’s real or false value?

The economic landscape in China has been nothing short of exciting lately, with quick-changing peaks and troughs. Following the recent stock market crash, investors are snapping up rapidly snapping up real estate, especially in Shenzhen and Shanghai. Investors are cashing out on their failing stocks and buying up real estate instead.

Shui On Land Wu HanPhoto credit: Shui On Land

The less-costly but equally major city of Shenzhen is leading the way for potentially similar activity in Shanghai, with property prices more than doubling in the last year. Properties are already considered expensive in the commercial and more cosmopolitan Shanghai, but even there, values are expected to rise 20 per cent. A new residential project in North-central Shanghai has recently launched to median prices of $1,600 psf, with a 1,800 sq ft unit  going for about $3.3 million. From the first-day sell-out response, saying that the buyers are biting is an understatement. Hong Kong developer Shui On Land is behind this project and will be launching the next phase in May this year, possibly at higher prices.

Taipingqiao1These actions however may be risky. A property bubble is growing and could burst if policies and economies are not managed efficiently. Some smaller counties are already struggling with increasing unsold inventory, with some townships reporting ‘ghost towns’ or developments which are severely undersold.

 

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

China’s property market on road to recovery

Following the recent blip in China’s economy, which has affected economies across the globe, investor confidence and expectations have dipped considerably.

Home prices have also fallen but are now on the road to recovery as the authorities have eased measures to help regions, in particular smaller cities, in danger of a supply glut. The People’s Bank of China (PBOC) has helped to keep the yuan steady after allowing it to fall rather drastically in the beginning of the year. It has reduced interest rates 6 times since November 2014 and also lowered repayment requirements to allow buyers to borrow more for their first and second homes. Home prices have risen in 37 cities over the last month. In the more touristic cities such as Hangzhou and Xiamen, home prices have grown 1.1 and 1.3 per cent respectively over November last year. In a year-on-year comparison, a growth of 5.6 and 6.4 per cent was recorded.

PikShaRoadPhoto: Pik Sha Road property in Hong Kong

China‘s government seems determined to keep the economy afloat though sharp rebounds may be unlikely. Economists are expecting the authorities to play a more supportive role this year, with one of their main tasks this year being the reduction of home inventory, thus investors and market players are expecting further easing of measures this year.

Cities which are also business hubs, such as Shenzhen and Shanghai, have seen the quickest pace of home prices recovery. New home prices in Shenzhen and Shanghai have increased by 3.2 and 1.9 per cent respectively, followed by 0.4 and 0.7 per cent in Beijing and Guangzhou. Most of the positive activity in the property market remains centred around a small market segment, and some less popular cities are still seeing a market decline.

 

Buyers picked up properties worth $102.27 million at auction

Rising interest rates and restricted loan options may have amounted in more properties going under the hammer this year. Though the number was not drastically different from last year’s, the total property value fetched at the auctions was much higher. The total value of properties sold at auctions this year is currently at $102.27 million, the highest in these past 5 years. Last year’s total auction value was $72.5 million.

LuckyHeightsBungalowPhoto: Bungalows at prime locations could have high projected values.

Residential properties were the main draw at these auctions. And figures have been on the rise since 2009. A total of 34 properties were sold at the auctions this year, and out of that 26 were private homes. That is almost double of the 46 per cent of private properties in auction in 2013. Property analysts are expecting the list of residential mortgagees to grow next year as the combined effect of a dampened rental market, increase in supply of completed homes, interest rate hikes, prevailing property cooling measures and a general sense of a slowing economy, sinks in.

One of the largest sales this year includes $16.3 million single-storey bungalow at Branksome Road. The projected value of its redevelopment may have made it a bargain buy, even at the hefty price. For developers and investors hunting for a worthy investment, these mortgage sales may be fertile ground.

International property markets to watch

Many of the hottest international properties are in cosmopolitan cities such as London, New York, Sydney, Tokyo, Melbourne, Hong Kong, Shanghai. But in cities which are just on the brink of breaking into the ranks of the big guys, the potential for growth could be immense.

Cambodia PRopertyPhoto: The Bay in Cambodia by architect firm Ong & Ong.

Though some may find investing in these emerging markets riskier, the lower costs now as compared to the potential yield make for an exciting landscape. In countries such as Cambodia and Vietnam, you may now find more developers building private residential condominiums and commercial properties such as shopping malls, shops and office blocks. The level of affluence in the local context is increasing, and foreign investment interest has been on the rise for some time now.

Though the political and economic environment in these emerging markets may not be as stable, investors have been able to get a glimpse of the potential these markets hold over the past 5 years. The rise in property prices and sales volume have been steady and yet prices remain affordable.

Considering Singapore’s relative proximity to Vietnam and Cambodia, and the rising number of Singaporean developers with good track records entering the market, buyer’s may be more willing to take the plunge.  In Cambodia, a 5 to 8 per cent net yield could be expected. The construction industry there is benefiting and by 2018, an additional 12.9 million sq ft of properties is expected to enter the market.

 

Melbourne’s Twin Peaks

As if the property scene in one of the loveliest Asia-Pacfic cities could not get more exciting enough, add towering twin 80-storey residential blocks and with almost 2,000 retailers in arm’s reach and there is buzz upon buzz.

QueensPlaceMelbourne‘s central business district (CBD) will be welcoming at least 819 new private apartments in just one tower alone of the 2-towered Queens Place, a landmark residential project right in the city centre atop Flagstaff Hill, the city’s highest point. Talk about cream of the crop.

Interspersed between residential units within the 80 floors of block 1, which has been launched in Stage One of the project, are commercial and retail spaces. With prices starting from A$429,000, there are a variety of units available including one-, two- and three-bedders, penthouses and sub-penthouses. Demand from local buyers have been positive and the project certainly presents itself well to overseas investors.

Photo credit: South East Property

This sparkling new gem also boasts amenities such as private lobbies, pool, spa, sauna, wine cellar, library, private gardens, private bars and dining rooms, and even poker and mahjong rooms. It’s prime location puts it within 2-minutes walk away from major shopping malls including Emporium, Myer, David Jones and Melbourne Central, and also the numerous offices nearby. Without doubt it would command considerable resale and rental yields especially with a rising Australian property market.

The project is marketed exclusively by South East Property in Singapore and Malaysia, in collaboration with Colliers International.