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.

From East to West – What’s prompting Singaporean investors to invest in UK properties?

Northern_Warehouse_and_Beetham_Tower

Investment trends in 2015 have made for compelling analysis.

Uncertainty in global equities markets and political instability are just some of the reasons that have prompted many of the world’s investor community to reconsider their investment strategies this year.

Yet amid all of this change and upheaval has remained one asset that continues to generate global investment interest – UK property.

A weakening rand, for example, has triggered high numbers of investors in South Africa to get their money out of the country and diversify their portfolio with a British real estate acquisition.

And another region in which the UK market has seen significant levels of sentiment is Singapore. This year many investors have decided to hold off entering one of Asia’s most popular property markets, and instead invested in one of the highest performing in Europe. Such significant activity has prompted Select Property Group, the UK’s leading property investment company, to open an office in downtown Singapore, where they will be holding an exclusive grand opening on 25th November.

But why are investors in the region rushing to secure assets in a market 7,000 miles away?

Singapore – a 13-year slump with no end in sight

For many investors, patience has finally worn thin. Singapore’s property market has now been sliding for eight consecutive quarters, overwhelmed by the government cooling measures put in place in recent years to control what has become the continent’s second most expensive real estate market. With yields being swallowed and an outlook that predicts little market improvement, an alternative investment strategy is urgently sought.

What about the Singapore equities market?

Although it offers an alternative investment option, Singapore shares are also on the wane. The Straits Times Index has plummeted 18.6% since its peak in the middle of April this year.

Besides, it’s real estate that investors in Singapore have familiarised themselves with, thanks to historic capital growth of 83.7% in the last 10 years. But now house prices are experiencing slow residual declines and they cannot be offset by yields.

Property is still the answer, just not in Singapore.

So why has the UK now become the place investors want to own real estate?

High returns and a long track record of growth for international investors make British property an attractive proposition. In three decades UK residential real estate has driven better returns than gilts, equities and commercial property.

Instead of weathering the storm of the Singapore market, investors can take advantage of the security the UK offers, with its political and economic stability and returns in a strong currency.

Which UK markets are currently offering the highest growth?

Traditionally a nation of homeowners, Britain is currently undergoing a rental revolution. A preference for flexibility, as well as changing generational attitudes, means that by 2025, it’s estimated that over 50% of 20 to 39-year-olds in the UK will be renting their property.

As such, private rented sector (PRS) property is one of the must-have property assets in the UK right now. Cities such as Manchester have seen yield growth 13 times faster than London, as the demand for property in key regional markets is being met with low levels of supply.

Additionally, student property has been established as the UK’s number one asset in recent years. A product that experienced growth throughout each year of the global economic downturn, huge undersupplies of purpose-built student accommodation (PBSA) across the UK has created huge investment opportunities in a country with an international appeal for higher education.

Select Property Group will hold the exclusive grand opening of its new Singapore office on Thursday November 25th – and it wants you be part of it. Hear about the latest UK investment opportunities and find out why Select Property Group are the trusted UK property investment experts of investors in over 117 countries. To register and secure your place, follow this link.

Moderation of HDB flat prices modest

HDB flat prices rose 50 per cent between 2009 and 2013. With the property curbs in the last 3 years, prices have fallen 10 per cent. The government are considering the decline moderate and have mentioned that it is not yet time to completely reverse the process and policies despite recent figures showing a stabilisation of resale flat prices and a rise in sales volume.

Yishun HDB

Photo: HDB flat in Yishun

The most effective cooling measures thus far have been the 2013 implementation of the mortgage servicing ratio limit. The loan amount home buyers were able to take to service a HDB flat loan was capped at 30 per cent of their gross income. On top of that, there was a 60 per cent Total Debt Servicing Ratio (TDSR) which was also introduced in 2013 to prevent borrowers from over stretching themselves with the number and amount of loans payments.

Industry experts are mostly in agreement about a sudden and drastic switch in policies which back backfire on the industry and property market. But some have felt that certain measures such as the ABSD (additional buyers’ stamp duty) could be lifted in phases to encourage property investment. The current rule requires foreign property buyers to pay an additional 15 per cent of the price of a property here while Singaporeans have to do the same but at 7 and 10 per cent for second and third subsequent properties.

The new National Development Minister Lawrence Wong has however mentioned that adjustments may be possible, depending on global and local economic situations.