Since the financial crisis of 2008 Asia has remained strong in the face of crumbling European cities and worldwide panic to emerge as the hottest property market on the planet.
Now the market is seeing investors shift away from the traditionally strong Asian destinations and shifting their attention towards those that are untapped.
“Rich investors in places like Singapore and Hong Kong are looking at the prices in markets such as Vietnam and Sabah in Malaysia and saying, ‘for those prices it is worth a punt’,” says Asia-Pacific Research Director at Knight Frank Nicholas Holt.
“Unlike in the West where housing bubbles and recessions have taken their toll, real estate is still seen as a very safe investment here in Asia and speculators would rather see their money doing something productive than having it lie dormant in a bank account,” Holt said.
There are obviously still dangers in investing in real estate in emerging markets but it appears the potential financial advantages are attracting an influx of new investors willing to take the plunge regardless of risk.
“Property in these emerging markets – with the notable exception of Myanmar, where prices are currently very high – tend to be significantly lower than in core destinations such as Singapore and Hong Kong,” says Head of Research at CBRE Southeast Asia Desmond Sim. “Therefore it is much easier to get first-buyer advantage as these markets are not saturated yet, which is why rental yields can be attractively high.”
However with new frontiers comes a new set of risks. Foreign ownership laws can be tough in emerging property destinations while other risk factors include inexperienced developers, oversupply of housing stock, political strife and punitive stamp duty.
Singapore has been a traditionally strong market