October 4, 2012
Emerging markets in Asia could offer good opportunities, but new investors should study each market carefully before taking the plunge.
There are good deals to be found in ASEAN property markets, but new investors must be cognizant of potential hurdles in each market, said a number of developers and property consultants.
"Vietnam faces banking and financial problems. The interest rate is quite high at 18%, while inflation is 20%. Property is a speculation market," said James Pitchon, executive director of the property consultant CB Richard Ellis (Thailand).
"The condominium and office sectors are in oversupply, while there are barriers to entering the property market. Most land in Vietnam is owned by the state. If it does not release it, then it can be quite difficult to invest in the property sector there," he added.
Prasert Taedullayasatit, chief business officer of the SET-listed Pruksa Real Estate Plc, advised that investors should plan for a quick entry and exit if considering Vietnam.
"Currency and property prices in Vietnam are so volatile. When we entered three years ago, one baht equalled 500 dong, but today it's about 675 dong due to soaring inflation," he said.
According to Tony Picon, research director of Colliers International Thailand, the seeming attractiveness of Myanmar investments should be tempered by unpredictable government policy and a volatile political situation.
He added that enforcement of laws and regulations is somewhat lacking, and investors also have to grapple with poor infrastructure. Also, locals do not trust the banking system, and so would rather hold on to their cash than invest in properties.
Suphin Mechuchep, managing director of Jones Lang LaSalle (Thailand), said the office sector in Manila is fast-growing, driven by outsourced service centres and call centres. However, vacancy remains tight in the CBD, hovering at around 4.3%. Although the Philippines offers higher investment yields of 6.6% (compared to 3% to 4% in Bangkok) it is hobbled by the lack of a reliable mass transit system.
Mechuchep highlighted Jakarta as the most attractive investment venue owing to the country's robust growth in the retail, office and condominium sectors.
Malaysia and Singapore still have good opportunities to be found. The Malaysian government is pushing for major economic growth by 2020 and would readily welcome foreign investors across many sectors in order to help achieve its goals. As for Singapore, property prices are high, but hotels, with less land requirements than retail centres, offer interesting opportunities.
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