Estimates by BNP Wealth Management predict that by 2026, Asia will be home to over 35% of the world’s investable real-estate stock.
The range of investment opportunities available within the Asian property sector have made it particularly popular amongst foreign investors. However, unfamiliar laws, economies and ways of doing business can be a daunting and even unsurmountable prospect to the uninitiated.
While Europe deals with the uncertainties surrounding the EU and a breakaway of one of its key trading partners, almost the opposite significant political changes are taking place in Asia.
Asian countries are now fostering stronger global integration and trade ties in their region, creating a more secure environment for overseas investors.
Economically, Asia is developing at a rapid pace, particularly in the Southeast where China is supportive of smaller businesses. With major political and economic advancements in Asia, and political uncertainty across Europe and the US, now could be the right time for investors to start looking East.
Where in Asia should you invest?
There’s no single hotspot for Asian property investment, and as with all investment decisions you should consider your personal circumstances and your goals, whether that’s storing and protecting wealth, targeting high returns from capital growth or securing reliable yields.
Hong Kong and Singapore
Hong Kong, for example, offers a great investment for the cash rich. The legal system is secure, quality of life is high and the local economy, and therefore rental demand, is solid.
However, this destination may be out of reach even for the average millionaire, with one of the most expensive real estate markets in the world.
This is also the case in Singapore, another modern city, which has a transparent property market and robust economy. However, due to these higher prices, average returns are low at just 4%.
Hong Kong and Singapore are great options for those who want to store their wealth but may not be suitable for the average investor who doesn’t have millions to spend or is seeking a more aggressive strategy.
For those with smaller budgets and bigger ambitions, Malaysia may be an option. Malaysia is unique in that it is the only country in Southeast Asia where foreigners can easily own land as well as condominiums. Property investment in Malaysia offers a gross rental return of around 6% with extremely low prices even when compared with other Southeast Asian countries.
For those considering investment in Malaysia, it’s important to be aware of the somewhat archaic property investment laws.
For example, there is a minimum threshold on how much foreigners can invest. This was introduced by the Malay government to ensure investments are made exclusively within the luxury market to avoid disrupting the local market for the average Malaysian buyer.
Nonetheless, even with this threshold, Malaysia is still one of the most affordable places to invest in Asia. With the possibility to own land, high yields and low property prices, it’s clear to see why up to 90% of Kuala Lumpur’s buyers are investors.
If you are simply looking for a low-cost investment with minimal legal restrictions on investment, Cambodia could be the perfect place for you.
On average, the economy grows by 10% each year and this is set to increase further with the Japanese government helping to finance the development of railways and roads.
Currently, entry-level condominiums in metro cities are valued at around £1,200 per m² and are increasing by around 7% per year. For those interested in a straightforward, low-cost investment in an up-and-coming location, Cambodia may be the right choice.
The range of opportunity for property investment in Asia cannot be underestimated, with great options for every investment objective, whether it’s to preserve wealth or to generate the highest yields.
If you do decide to invest in property abroad, its best to use one of the new generation of cloud-based property management platforms to keep an eye on your portfolio from anywhere in the world.
This new generation of PropTech is making the property sector more connected, ultimately helping investors manage and grow their portfolios efficiently and hassle free, without limiting investment options to their local areas.
Systems such as Arthur Online are entirely customisable. You can use them to remain in a central managerial position while not actually being on the ground, as things like tenant check/out can be handled by local agents. You can arrange viewings, sign documents and assign workorders to contractors all through dedicated apps.
*Marc Trup is the Founder and CEO of Arthur Online