Top 5 Real Estate Markets in Asia

Rick Hancock
Here are my insights on real estate markets in Asia and countries with the greatest potential in 2017.

There is a lot of speculation about the real estate markets’ outlook in Asia for 2017. In my recent interview with Asian Property Review, here are five countries, which I believe, present great upside potential for investors. 

Singapore

With a combination of a weakening economy, declining demand and excess supply of real estate, especially in the residential and office markets, Singapore stands out as a country with huge potential for those who have been looking for an entry point into a market with a very stable government and transparent means of doing business. Taking on investment or development opportunities in Singapore should be viewed with a mid- to longer-term view.

Taking on investment or development opportunities in Singapore should be viewed with a mid- to longer-term view.

Recent transactions that underpin this positive sentiment are the sale of the Asia Square Tower 1 in June 2016 and the more recent record bid for a white development site on Central Boulevard to IOI Properties Group for $2.57 billion. In all, the tender saw a collective $14 billion in bids from a total of seven bidders.

Malaysia

Malaysia is currently experiencing an influx of foreign direct investment (FDI), perhaps due to the fall in the ringgit currency. Most notable of the foreign investors are the Chinese with recent announcements across two major infrastructure projects for the 620km East Coast Rail Link by the China Communication Construction Company (CCCC) for US$18.3 billion and the US$14 billion investment for the Melaka Gateway project by PowerChina International.

Both of these projects may create opportunities for complementary real estate developments such as logistics, manufacturing and industrial parks, master planned communities, mixed-use developments and Transport Orientated Developments, if driven by a sustainable transport strategy.

The Kuala Lumpur-Singapore High Speed Rail, which will connect seven cities in Malaysia to Singapore, will also be another catalyst for complementary real estate development when it is due to commence construction in 2017.

China

There is still a large amount of foreign capital interested in investing in China real estate. However, due to a changing economic backdrop and an increased amount of domestic capital competing for the same opportunities, it has become even more difficult for foreign investment to be placed.

With the world's largest e-commerce network established in China, investors should also look to logistics as an asset class.

The residential market has become less attractive, as local investors and developers who are well entrenched in this market do not need foreign investment. Recognising a gap in international knowledge and skill set to support the commercial and/or retail markets, there is an opportunity for foreign investors and developers to partner with local investors and developers.

With the world's largest e-commerce network established in China, investors should also look to logistics as an asset class.

Sri Lanka

For pioneering investors and developers who are looking for a relatively new market with huge first-mover advantage, the opportunities in Sri Lanka should not be overlooked. The Government of Sri Lanka has recently announced its Western Region Megapolis Planning Project (WRMPP), which is aimed at creating a Megacity to rival the likes of Singapore whilst also solving its emerging market issues such as environmental pollution and lack of infrastructure.

The China Harbour Engineering Company-led development of Port City Colombo is at the heart of this master plan. It will provide opportunities for third-party developers and investors to enter the market across a variety of property asset classes and take advantage of investing in a country, which has a new government that is pro-active in driving regulatory change.

Vietnam

Last but not least, Vietnam is one of the fastest growing economies in Southeast Asia with a GDP growth year-on-year of 7.5% in the first half of 2016. With a current oversupply of condominiums, investors should look to the office market, in particular, Ho Chi Minh City, with current yields at 7% to 8%, which has limited supply coming to the market in the next few years.