Asian Property Investment Risky And Poorly Performing
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Asian residential property buyers beware!
Asian real estate markets seem on the surface, which differs from the Asia crisis and will be back on its feet. In fact the whole world has a residential real estate boom in the last ten years – Europe, the USA, Australia and New Zealand, the real estate prices are rising.
But in Asia the reality is quite different. Residential markets in Asia are poor, according to a report by the Global Property Guide. Once the price figures are adjusted for inflation, Asia’s poor.HOW looks RESIDENTIAL Asian property markets have improved since the peak (inflation adjusted):
Hong Kong: still 61% below peak
Indonesia: still 50% below the peak
Malaysia: still 10% below the peak
Philippines: still 55% below peak
Singapore: 37% less than peak
South Korea: still 38% below peak
Thailand: still 10% below the 1992 peak
“There were some less profitable than residential real estate investment in Asia over the past ten years,” says Matthew Montagu-Pollock, publisher of the Global Property Guide.
“And if the current building boom in Asia continue to take the next ten years is not much fun for property investors.”
Rents are quite high in Indonesia, Thailand and the Philippines, while Asian countries benefit from the strong economy. But their real estate markets’ growth is limited mainly by the government mis-steps.
“Asian real estate markets have been stronger had it not been the fault of the government,” says Prince Cruz, chief economist for the Global Property Guide. “If it is not a coup, a protest rally or runaway inflation, then it is the government interference in the markets that the apartment has killed, performance.” Cruz-study points to the housing markets of Singapore, Hong Kong and South Korea as victims of government subsidies and intervention, while the housing markets in the Philippines, Indonesia and Thailand have suffered from political instability.Asian prices are still far below the peak levels
Despite the glossy reports of recovery, Asian house prices are still below their pre-Asian crisis. In a report published Global Property Guide suggests that a combination of inflation, widespread subsidies of housing markets, political unrest, and overbuilding, have the results in Asia is very different than other “boom markets. Asia today, real estate boom is a ‘construction boom – not a property boom “, it says, warning investors against the tempting siren song of the real estate professionals.
Adjusted for inflation, the happy picture changes remarkably from the good news about property prices.
Indonesia, for example, is a difficult time battling inflation. Corrected for inflation, Indonesia house actually fell 8.4% in 2005 and 7% year on year in 2Q the 2006th
This year is mild nominal price fall in Hong Kong (3.7%) is enhanced by the inclusion of inflation. Hong Kong housing prices actually fallen by 6% in real terms.
The (low) shows price increases in South Korea, Singapore and the Philippines actually falls, or are greatly moderated, once inflation is taken into account in.
The Global Property Guide is a research publication and web site for the high net worth investor in residential property providing information about the process and benefits of buying property in any country in the entire world.
To access the report:
http://globalpropertyguide.com//articleread.php?article_id=85&cid=4
