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The winners: Singapore, South Korea and the Philippines

Singapore experienced Asia’s highest residential property price increases during 2006, with 9.5% real (inflation-adjusted) house price rises.

There were also 9.3% real house price increases in South Korea, and 9.1% real house price increases in the Philippines. These were seen in the Global Property Guide House Price Indices, the biggest collection of residential property price indices.

Singapore’s strong 2006 GDP growth rate, at 7.9%, pushed up demand for Singapore property. The Urban Redevelopment Authority (URA) private residential property price index rose by 10% (9.5% in real terms) in 2006.

South Korea also saw a strong rebound in property prices, despite continued efforts by the government to depress the market. The Kookmin Bank’s house price index rose 11.6% in Dec. 2006 (9.3% in real terms) from a year earlier.

In the Philippines, strong economic growth and reduced inflation contributed to the continued recovery of the real estate sector. In addition, demand from Overseas Filipino Workers (OFWs) and dual citizens has been strong, pushing prices up. Luxury condominium prices in the Philippines rose 15% (9% in real terms) in 2006, following an 11% nominal price rise in 2005, according to Colliers International.Japan and Hong Kong are laggards

Japan’s residential property market continued to fall in 2006, despite repeated attempts by the media to portray the market as rallying. Nevertheless, the residential urban land price index registered a smaller fall in 2006 (-2.8%) compared to last year (-4.7%).

Hong Kong’s property market turned negative (-2.13%) in 2006, after impressive gains in 2004 (27%) and 2005 (8%). Higher interest rates in the US, mirrored directly in Hong Kong, were a major cause of the downturn.

Taiwan’s messy political crisis seems to have frozen residential prices, with 0% appreciation during 2006. In real terms, Taiwan experienced a decline in house prices during 2006 (-1.7%). During three years prior to the second quarter of 2006, Taiwan’s Sinyi house price index rose 17%.

In Malaysia, house prices did not to keep pace with inflation. Malaysian house prices today are at the same level as 1995, in real terms.

Thailand saw the end of ending its strong post-Asian crisis property market recovery, as the political crisis impacted the economy. House prices moved up just 1.9% in 2006 (-2.4% in real terms), after 2005’s price increase of 7% (1.5% in real terms), and 2004’s rise of 9% (6% in real terms).

Indonesia managed to reduce 4Q 2006 inflation to 6% from 16% during the first three quarters. With the house price index registering a 6.6% increase in 2006; house prices rose by 0.5% in real terms.The 2007 elections – risks abound

2007 is an election year in Korea, Taiwan, and the Philippines, and political uncertainty is likely to increase. There will also be elections in Japan and Hong Kong, but they are unlikely to have much impact on the real estate market. In Thailand, uncertainty will increase if elections are not called. The Philippines. A victory for President Arroyo’s party in the upcoming Congressional elections would be positive for real estate. Election years in the Philippines bring money inflows, but also increased uncertainty. But if Arroyo wins enough seats in Congress she will push constitutional change, removing constitutional limits on foreign ownership of real estate and companies – good for real estate. South Korea. The economic interventionism of left-of-center President Roh Moo-hyun has been damaging for Korea’s housing market. His support is crumbling, and a less interventionist president may be elected in December. But even if the opposition Grand National Party wins, excessive government intervention in the housing market has a very long history in South Korea.Taiwan. Parliamentary elections at end-2007 will provide a strong lead on whether the Kuomintang (KMT) can regain control of the presidency in 2008 from the Democratic Progressive Party (DPP). President Chen Shui-bian’s two terms have largely been spent on keeping him from being ousted. Significant banking and tax reforms have been held hostage by politics. Japan. Half of the seats in the upper house will be contested in July. Seats held by the Liberal Democratic Party (LDP) may be reduced, risking its reform agenda. These seats were won with the help of former prime minister and popular reformist Junichiro Koizumi. Hong Kong. Donald Tsang is up for re-election as chief executive where elections are still largely ceremonial and Beijing’s anointment is the only significant factor. Pro-democracy campaigners are hoping and pushing for reforms to full democracy and Mr. Tsang’s failure to push for constitutional reforms in 2005 means that this will be his last term.Thailand. The sooner elections are called, and Thailand is returned to democracy, the better it will be for the property market and the economy as a whole. The fate of Thailand’s property market hinges on the junta. If the junta prolongs military rule, the market will suffer.

The Global Property Guide sees inflation risks to be minimal in Asia in 2006. But other risks threaten the real estate market, particularly the re-emergence of bird flu in several countries, Indonesia in particular.

Review

“Timely, considering the dramatic slump in the American housing market and the global credit crunch.”  —Planning magazine

Niagara of Capital: How Global Capital has Transformed Housing and Real Estate Markets, explains how the record flow of financial capital into the real estate markets over the last decade stimulated a world-wide explosion in housing production and prices, resulting in a dramatic change in the basic structure of household wealth in most nations, including the United States. Author, Anthony Downs provides a step-by-step analysis of the role easy capital played in generating this rise in household wealth, and examines how the availability of cheap money led to the proliferation of poorly underwritten and risky loans, leading to the collapse of the subprime market and the subsequent credit crunch and stock market decline. Along with the disintegration of the subprime market, Downs outlines other scenarios that could t (more…)

Property can make you big money but how do you know which are the best places to buy? Our global property guide picks out the top property hotspots.
We buy property for many different reasons – traditionally, of course, we tended to buy houses to act as homes. They were purely places where we’d live – we often expected to spend our entire lives in one house.
Times have changed. Property is now seen as a great investment – we can buy property with the expectation of it rising in value. Many of us can now dream of owning our own property portfolio, whether at home or abroad. Indeed, we can also dream of buying a second home or a holiday home overseas.
In this article we take a look at some property hotspots – locations where the housing market has performed strongly and that would also allow you to enjoy a great lifestyle.
Our first choice might surprise some. We think that Bulgaria offers some great potential returns on investment, with house prices having almost doubled in some areas in the last five years. Many speculators are looking to the Black Sea resorts to buy excellent properties, particularly the Golden Sands and Albena. The ski resorts (such as Bansko and Borovetz) offer some great rental returns. Additionally, the major cities such as the capital Sofia, Varna and Plovdiv offer great investment potentials.
As Bulgaria’s economy has been developing, it’s links with the rest of Europe have also improved. Bulgaria was recently given admission to the European Union and also benefits from some vastly improved transport links, including cheap flights to some leading western European cities.
Our second choice as a property hotspot is maybe less surprising – the United Kingdom. The UK’s property market continues to defy many experts, with property prices rising at an annual rate of approximately 10%. Although London prices are now extremely high (possibly too high for many US investors given the relative strength of the dollar) there are plenty of investment opportunities close to the capital.
Some leading areas are Basingstoke, Woking, Winchester, Salisbury, Oxford and the commuter towns of Essex.
With a highly developed and regulated property market (relatively speaking), the UK does offer some great investment opportunities for overseas investors.
For those wishing to take a bigger risk with their property investment (in the hope of seeing higher returns), the developing market of Brazil offers some opportunities. Though the housing market is in its relatively early stages, Brazil does have some great benefits, including a very appealing climate and some low-level entry prices. It may offer a particular gap in the investment market for American investors, given their close proximity to Brazil when compared to Europeans.
We hope we’ve given you a taster of some of the world’s leading property opportunities. Good luck with your future investments!