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Asian Real Estate as an Inflation Hedge

According to the 2012 Q3 Asia-Pacific Capital Market Observation, the total value of the Q3 Asia-Pacific real estate investment reached $19 billion, with an average increase of 21% over the past three years, considering that fast 3 years captures the tail end of the Global Financial Crisis, those numbers are impressive and will remain impressive over the next 5 years. That makes prime Asian Real Estate a viable inflation hedge.

There is also a positive foreign exchange component in ASEAN, China, Taiwan and Korea. As the USA, Japan and Europe embark on a year of printing money in 2013, Asia in the most part, as avoided that issue by having relatively low debt to GDP combined with the strongest growth rate in the World.

“Asian property is a bargain, the various reports of bubble’s etc are incorrect, the changing demographic of Asian Society is creating a new dynamic, a new market is emerging and demand is high as long as you remain value driven and in the sectors/countries/cities.” Shayne Heffernan said today in a note to traders.

Reports shows that global investors is holding a cautious attitude to the capital market due to the decelerated growth of world economy and the Euro-zone debt crisis. However, the concern is that HongKong, Singapore, Japan and Australia have become the investment center of the capital market.

Chinese mainland investors are still the driving force of real estate investment, accounting for 80% of the total deal.

Foreign direct investment trends are still showing China and Asia markets will grow until at least 2020, despite an ongoing global financial crisis. In fact much of the money being printed in the USA, Europe and Japan will be invested in Asia, increasing the regional rate of growth and real estate values.

List of ASEAN countries GDP (nominal), International Monetary Fund 2011 estimates.

Rank	Country	GDP (millions of USD)
—	World	70,160,000
—	European Union	17,577,000
—	United States	15,094,000
—	People’s Republic of China	7,298,000
—	Japan	5,869,000
—	South Korea	1,163,000
—	ASEAN	2,153,919
1	Indonesia	845,680
2	Thailand	345,649
3	Malaysia	278,680
4	Singapore	259,849
5	Philippines	213,129
6	Vietnam	122,722
7	Burma	51,925
8	Brunei	15,533
9	Cambodia	12,861
10	Laos	7,891

List of ASEAN countries GDP (PPP), International Monetary Fund 2016 estimates.

Rank	Country	GDP (millions of USD)	Percent
—	United States	19,704.590
—	People’s Republic of China	20,336.086
—	Japan	5,324,000
—	South Korea	2,148,000
—	ASEAN	3,340,023	100.0
1	Indonesia	1,777,000
2	Thailand	842,789
3	Philippines	531,186
4	Malaysia	362,398
5	Singapore	318,915
6	Vietnam	230,341
7	Burma	63,689
8	Cambodia	21,081
9	Brunei	18,120
10	Laos	10,491

Interested in Investing in Asian Real Estate?

Linda Johnson,
Business Development Director – Private Client Group,
Heffernan Capital Management
Sales@Heffcap.com

Singapore

3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408
Fax: +65 6329 9699

Jakarta and Bangkok were the outstanding prime residential market performers in 2012, with year on year price growth pushing 30%, the new Asia Pacific Residential Review report from Knight Frank shows.

While in Jakarta, this positive price appreciation is in parallel to the rest of the housing market, in Bangkok, this is in contrast to mass market price drops, as luxury condominiums in tight supply situated off Sukhumvit have seen their prices pushed upwards, the report says.

Indonesia’s strong performance continues and the introduction of a Loan to Value (LTV) cap of 70% in July has not held back demand as positive buyer sentiment continued to fuel price growth in the Jakarta market, it points out.

In Bangkok, with surprisingly little difference in selling prices of condominiums in the city and city fringe areas, buyers tend to favour condominiums in the city area, while demand for luxury condominiums in the heart of Bangkok remains high, with supply tight and few projects launching this year.

In Thailand, the firm expects price performance of the Bangkok condominium market to polarise between city centre and periphery locations. ‘On the periphery, with large amounts of new supply in the market we expect more price competition leading to softening prices, whereas with more limited supply available in the city area, we expect more upward price
Pressure,’ says the report.

In Vietnam, the huge credit growth of preceding years is coming back to haunt banks, who have record amounts of bad debt related to the real estate sector. ‘We expect the market to continue to be troubled, with the relative slowdown in the economy continuing to put downward pressure on residential prices. This does however provide opportunities for buyers
who can secure funding,’ the report explains.