Top Property Markets In Asia For The Investor And The Retiree
A parking spot sold in Hong Kong this year for US$547,000.
Land in Hong Kong is expensive and the limited inventory of parking spaces has driven up the cost to more than that of a decent home in most of the world. Hong Kong, though, isn’t typical of the region, and prices on this island shouldn’t scare you off the idea of real estate in Asia altogether.
More daunting and potentially intimidating when shopping for real estate in this part of the world are the foreign ownership restrictions. Before entering any Asian market, you want to be sure you’re clear on what you can and cannot own as a foreigner.
The Philippines restrict foreign ownership to condos…and in any given building foreigners can own only up to 40% of the units. Still, this country makes sense for both retirement and investment. Real estate prices in some parts of it are unbelievably cheap. Focus on the more active areas where you would have an easier time reselling on the local market. You don’t want to be limited by having to find another expat buyer when you decide to resell.
You can find small apartments in Quezon City for less than US$60,000. That would buy you a one-bedroom apartment in a new building.
Prices in the better areas of Manila range from less than US$1,000 to more than US$2,000 per square meter. You need to do some ground work, as anywhere, to identify the particular neighborhoods that’d make most sense for you, depending on whether you’re shopping for a place to live or for a rental investment.
My favorite spots in the Philippines for pure investment are the resort towns of Cebu and Boracay. You can invest in a condo hotel in either of these beach locations for well under US$100,000 and expect good rental yields into the low double digits (question heavily anything projecting more than 12%).
Thailand places similar restrictions to those in the Philippines on foreign ownership of property, except in this country foreigners can own up to 49% of a condo building. In this country, the resort areas can offer opportunity for rental yield; Pattaya is Thailand’s biggest and best known beach destination. As in the Philippines, you can find one-bedroom apartments for less than US$60,000. Expect yields to be in the range of 6% for long-term rentals and a bit higher for short-term.
Pattaya might be a place to consider a rental investment, but other parts of Thailand make more sense as places to live. A top lifestyle choice in this country is Chiang Mai, where you can find one-bedroom apartments on offer for less than US$45,000 in some new developments. That would be for a unit in a building with amenities like a swimming pool. On the other hand, that apartment wouldn’t be much bigger than a large hotel room. Still, if you’re a retiree with limited resources who wants to own your own place, you’re not likely to find a property you’d actually want to live in anywhere else in the world for less than US$45,000.
Malaysia‘s foreign ownership restriction is based on the price of the property. Foreigners have to spend at least 1 million ringgit (about US$300,000 right now) to own a piece of property in Malaysia. Note that it must be 1 million ringgit invested in a single property; can’t be an aggregated amount among multiple properties.
That limitation makes buying for rental yield difficult. The sweet spot in the Kuala Lumpur market is apartments in the 120-square-meter range, which go for US$150,000 to US$250,000. Push the purchase price over US$300,000 to meet the minimum ringgit criteria and your yield will drop.
Still, Kuala Lumpur is a good, steady market. Also note that the U.S. dollar has seen a surge in value against the ringgit in the last few months. It’s close to its high of 3.30 ringgits to US$1 reached back in February.
Whatever the exchange rate in Malaysia, you could sell your parking space in Hong Kong and buy yourself a great apartment in the best neighborhood in KL.
Lief Simon
