Property Investment in Malaysia and South East Asia

There has been limited attention paid to the property markets of South East Asia on Amberlamb of late – but with a mixed bag of data coming from the region at the moment and an increasing number of investors looking further afield for property investment potential abroad, we decided to focus on real estate economies in the likes of Singapore, Shanghai, Vietnam and Malaysia today.

According to the Global Property Guide, Singapore was the best performing property market in the world last year in real terms but there are certainly other locations in the region that are at least as interesting going into 2008 and looking to the longer term so read on for the latest information about property investment in Malaysia and South East Asia.

The situation in Singapore right now is very exciting for property investors.  On the one hand property prices have been rising since the middle of 2006 to reach their highest level in about 10 years – and yet prices remain below the level they reached prior to the Asian financial crisis suggesting that there is maturity and common-sense in the market, which gives both domestic and international buyers a great deal of confidence in Singapore.  Add to this an environment where interest rates are incredibly low, rental rates are predicted to rise by up to 20% in some areas and where demand is intense and you have a very healthy market for foreign investors to buy property. 

As a result of all of these factors, analysts from leading financial institutions are all in agreement that Singapore’s real estate market will remain highly buoyant and successful throughout 2008.

Other locations in South East Asia that are of interest to overseas investors include Vietnam for example.  The nation is benefiting from urbanisation – i.e., there is a growing local affluent class seeking real estate to buy and rent and this is fuelling demand and development considerably; this translates into opportunity for investors. 

In terms of price movement, in Ho Chi Minh City in Vietnam where demand is at its most intense, property prices have doubled in the past year with high grade apartments now fetching USD 3,500 per square metre according to local sources, with others believing that it is not unrealistic to see top end prices reaching nearer USD 4,500 per square meter within 12 – 18 months. 

Another market that did well in 2007 was Shanghai which enjoyed exceptional growth levels up to the fourth quarter in 2007 but which is now actually a cooling market according to a number of analysts.  They cite the fact that the balance between supply and demand has evened out.  This has apparently created an environment where property price appreciation has slowed down considerably compared to last year.  Having said that, there is still growing demand in Shanghai – so much so that the likes of Morgan Stanley are predicting a flow of up to USD 2 billion of foreign capital into Shanghai’s real estate market in the next few years.

In terms of China as a whole as a popular property investment location – there are undeniable fundamentals supporting investment.  There is substantial room for growth in many of the most urbanised areas, there is increasing local demand for housing as well as rising affordability – but China is not a simple market for the average investor to access which significantly decreases its appeal for the individual investor looking for an easy market to navigate – and what’s more, the nature of the political regime in China means that there will always be artificial restrictions in place that limit profitability. 

There are far more attractive markets in South East Asia for investors!

But of course, the driving factors behind any given property market have to be understood by a potential investor before they buy in – it’s never as simple as finding a location where there is seemingly a gulf between demand and supply.  Macro and micro economic factors have to be examined, the fundamentals supporting long term demand and affordability have to be understood, potential factors external to the nation that could impact its economy need to be taken into account as do domestic political factors for example.  So, to the casual observer of any housing market in the world there can be a great deal of confusing data. 

What this means is that anyone considering investing in property abroad has to do a significant amount of research into the short, medium and long term viability of the market and their investment approach.  Naturally the less information there is publicly available about a nation’s housing market the harder it is for an investor to make an informed decision.  And when it comes to the markets of South East Asia, it can be incredibly hard for an overseas buyer to get a complete and balanced picture of a market. 

In a nation such as China there are added difficulties relating to the fact the market is incredibly immature so there is far less historical data to aid a decision - and what’s more, in a location such as Vietnam where it is virtually impossible for a foreign individual investor to buy in, the odds are stacked decidedly against such an individual when it comes to profiting from property.

Which is why we at Amberlamb remain hotly in favour of property in Malaysia – why look anywhere else?

The government in Malaysia is doing all it can to attract foreign investment into property, it is a tax efficient location to buy in for many, it is a nation with a buoyant and expanding tourism and business environment which equates to demand, affluence, affordability and a strong potential for profit, it’s a stunning nation with well built, attractive real estate for sale, and according to local property professionals, Malaysia’s property market is even well positioned to smoothly ride out any impending storm created by the US sub-prime crisis and potential recession.

Special Reports: Property News for Malaysia

Malaysia Property Buyer’s Country Guide
Luxury real estate developments across Malaysia are attracting international interest from property buyers attracted to the scope in the market.

Malaysia Property Buying Process
The Malaysia property buying process is relatively straightforward, but raising local finance to buy Malaysian real estate is time consuming

Malaysia Property Investment Potential
Property investment opportunities in Malaysia offer strong rental yield potential and real estate investors draw confidence from Malaysia's strong economy