Asia Offers The Best Real Estate Investing
Heffernan Capital Management remain bullish on Real Estate in Asia despite the global slowdown. “property in the main business centers of Asia offer great long term value now” said Shayne Heffernan.
“Strong demand for Office, Hotels, and Inner-City Residential will remain strong in Asia as the local Economy outpaces the world economy for the next decade at least” he added.
This market is fast becoming a regional market, as we stated previously, Indonesians, Chinese and Indians, are listed as the top foreign buyers of real estate, Singapore authorities say.
The latest data from the Singapore Urban Redevelopment Authority (URA), states that 1,706 Indonesians, including those who are listed as permanent residents in Singapore, purchased private homes last year.
This trend is being repeated in every major destination in Asia.
Not only Real Estate, but Real Estate Developers and local REITs are well worth buying now.
Find out more about trading stocks in Asia, Click Here
In the recent Asia CEO Forum that gathered top-level business executives and key decision-makers, Alastair Hughes, CEO-Asia Pacific of Jones Lang LaSalle Leechiu, presented a comprehensive report on the property market trends documented throughout the Asia Pacific region. “It’s quite difficult to sum up whether Asia Pacific is a boom or a bust,” shares Hughes, “because extremely different things are happening in each market.”
Hughes’ report reveals Hong Kong rents have sprung back up, increasing at 60 percent since 2009 when it was at the bottom of the market. “The reason is that, one, Chinese companies see Hong Kong as the gateway to the rest of the world,” begins Hughes.
“And two, foreign companies see Hong Kong as a gateway to China. The little rock with very little supply—so there’s lots of demand, very little supply, and rents have grown very, very quickly.”
On the other extreme, however, is Tokyo where rents have fallen quite dramatically since its peak. “They haven’t really begun to recover at all,” shares Hughes. “We thought they were going to nudge up a little bit this year, but then the earthquake hit and they’re still falling. There’s quite a significant difference and such a huge range of different rental dynamics going on in each of these Asian markets.”
Looking forward, however, Hughes states a couple of factors that will drive rent forward. “One is supply, because there’s quite a lot of construction going on,” he states, “and the other is demand, which is largely driven by economic growth. There’s a very strong correlation between what’s going on in the economy of a market and what happens to space demand. And for this, I feel very privileged to be in this part of the world. Because this is the place to be right now.”
Whereas Europe and the United States are forecast to grow at single-digit rates between 2011 and 2012, the main markets in Asia Pacific are experiencing economic growth that is much higher. “In some markets, rents are going to come off a little bit much next year,” Hughes shares.
Economic growth in China, he adds, will enable the superpower to grow ahead of its neighbors. The economic house of Japan is also predicted to bounce back in the next two years. The bottom line: Asia Pacific is growing much faster than the west, which consequently spells tenant demand for space increasing.
Even with talks of a sequel to 2007’s Global Financial Crisis happening soon, Hughes asserts that while it will have an effect in Asia Pacific in terms of corporate demand for office space falling, “Asian companies will continue to grow, more so this time than the last because of increase in domestic demand,” he pronounces.
“Multinational corporations would also want to get in on the growth in Asia Pacific and they want to chase cost efficiencies by off-shoring to this region,” he says.
In addition, the high net worth population in Asia Pacific has dramatically multiplied over the last few years. “High net worth wealth is up 31 percent to $9.7 trillion; there are now 332 billionaires in Asia Pacific compared to only 79 in 2001; and these are now becoming our clients, buying big chunks of real estate in the capital centers of Asia Pacific,” discloses Hughes.
An explosive Philippine property market
Details that emerged about the Philippine property market were vast and captivating as well. According to IDavid Leechiu, Jones Lang LaSalle Leechiu Country Manager – Philippines, office space take-up in the Philippines is now highest in the region at about 300,000 square meters for Metro Manila versus 150,000 sq.m. for all of Singapore.
“We’ve built about 20 business districts in the last 10 years,” puts in Leechiu, adding that it is an unprecedented level of development, “one we’ve never had in our hundred-year history.”
Crisis or no crisis, the demand for office space will carry on, mostly because the office market is quite supply sensitive. “Rents rose 30 to 40 percent in 2010, and it’s going to be quite up in the next 9 to 12 months because there’s no stock in the market today,” Leechiu shares.
Asia offers bright prospects for real estate investment and development, say industry leaders at the 11th Forbes Global CEO Conference.
Chairman of leading Taiwan developer, Farglory Group, Chao Teng-Hsiung, said real estate players were now focusing on Asia following the economic problems in the US and debt crisis in Europe.
He said the players were attracted by Asia’s steady growth in gross domestic product.
“Asia offers good prospects for development and the future is bright,” said Chao, who was one of the panelists at a session entitled, “Scouting locations”, here today.
Chao said Farglory Group has presence in US and China and was now expanding to the Middle East.
He said the real estate segment accounted for about 60 per cent of a economy of each country.
“After 10-20 years of development, the returns are still higher than stocks. Real estate is something that is worth investing in,” he said.
Chao said China offered enormous opportunities in the real estate industry arising from urbanisation, with 400 million people moving into city areas in a few years from about 240 million currently.
Another panelist, Regent Hotels and Resorts’ chairman, Steven Pan, said real estate players, especially from Brazil, Russia, India and China (BRIC), were scouting for locations in emerging markets for expansion.
Pan said capital from from BRIC economies has created opportunities and they had become important investors in emerging markets and neighouring regions.
The industry leaders are in consensus that real estate players must add value to their products, embark on branding, understand the cycle of development and integrate technology with the products to ensure long-term growth.
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services. www.livetradingnews.com
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