By : Kumar Tharmalingam Friday, 25th August 2017 1
Population Details Population (national) Population (capital) Thailand (Bangkok) Cambodia (phnom Penh) Myammar (Yangon) Vietnam (Hanoi) Indonesia (Jakarta) Phillipines (Manila) Malaysia (KL) Singapore 68.3 million 16 million 54.8 million 95 million 263 million 103 million 31 million 5.7 million 9.6 million 1.58 million 4.4 million 7.6 million 9.6 million 1.8 million 7 million 5.7 million
Population of ASEAN Myanmar 54,898,949 Indonesia 263,510,146 Philippines 103,796,832 Vietnam 95,414,640 Thailand 68,297,547 Malaysia 31,164,177 Singapore 5,784,538 Cambodia 16,076,370 ----------------- TOTAL 638,943,199 ----------------- More Than Half a Billion, 40% of the population is below 25 years old 3
Positive for ASEAN Great real estate platform for the future as economies improve over time irrespective of politics Negative 7 distinct languages 8 real estate laws 8 different levels of education 8 real estate platforms 4
Population is not a key for prosperity The most expensive real estate is in Singapore and Myanmar, complete opposites in governance and laws. Land laws are not cohesive or clear in some countries. Fortunately Malaysia and Singapore have prospered due to the Thorens land registry system imported from Australia. Simply if your name is on the title it is indefeasible. 5
Challenges facing real estate practitioners Money will flow into real estate projects with transparency. This means that in ASEAN, Singapore will continue to attract high net worth funds into its real estate. The Malaysian property market is a distant second as less 7% of property in the country is sold to foreign interests. 6
Java remains the principal market for investors and industry and financial services dominate the real estate sector. Land laws differ in different islands but recent regionalization of the tax laws from the capital means that development will be island based. States with coal mines are still doing well and tourism locations like Sulawesi are becoming popular as holiday homes and for retirees. With regionalization, island potential becomes specific but the Island of Java with 180 million and increased immigration and as the seat of central government will continue to prosper. 7
Jakarta Demand - The Jakarta property market, especially the market for office and residential properties, has continued to slow down due to weak demand since 2015. Luxury tax -The 20 percent luxury tax for properties above Rp 10 billion (US$750,000) has continued to reduce the demand for condominiums. Sales - The average sales rate is 67 percent, compared to 80 percent in the middle of 2015. But it is still better than other countries in Asia, *Sources Jones Lang Lasalle 8
Thailand remains in limbo as the market does not have a clear picture of the future but as in other ASEAN economies business ignores the politics. 9
Bangkok Demand has not recovered, Thai people do not want to buy condominiums that they consider as a long term debt Supply of 510,000 units has been completed with additional 100,000 units that are currently still under constructions. Developers are focusing on project with a selling price of 700,000 baht to 1.5 million baht PSF *Sources Colliers International 10
Bangkok *Sources Colliers International 11
Bangkok Most Prestigious development - 98 wireless road Developed by SANSIRI Group 25 storey 77 unit only Prices from 70 million Baht ( USD 2.1 million) to 300 million baht (USD 9 million) 2 bedder 70 million baht (USD 2.1 million) 3 bedder 127 million baht (USD 3.8 million) Penthouse 304 million baht (USD 9 million) 24 hour concierge services Bentley continental flying spur on standby for residents Interior furnishing by Ralph Lauren Interior design by Anne Carlson 50% sold 12
Cambodia is the cheap gambling capital of ASEAN with, for example, every new hotel under development is able to get a Casino License in Sihanoukville. Foreign investment gets tax free status for a number of years. 13
Phnom Penh Supply Huge over supply issues with property sales dropping 41% year on year Sales only 67% of total 100,278 strata housing units available has found buyers. Project on hold local and foreign investors are scaling back on launches and project size due to heightened risk of oversupply situation Investors investors who bought and intend to flip upon completion are looking at 30% to 60% drop in purchasing price over the next couple of years *Sources Vtrus Research 14
Phnom Penh *Sources Knight Frank Research 15
Myanmar has just opened its doors to investment but land laws are opaque so different agencies provide different opinions. Real estate is expensive and price per sq ft in Myanmar is always in U.S. currency. Sales are only for development by local corporations and foreign joint ventures. 16
Yangon Challenges The uncertainty over a law that permits foreigners to purchase condo units in Myanmar is extending a slowdown in the country s housing market Prices Current condominium selling prices in Yangon are still very much higher than anywhere else in Southeast Asia Market current launches are skewed towards the mid to high end market. Due to land prices and government requirements.there remains a widely untapped demand for low and middle-income developments and that affordability is still a main concern among the population s majority *Sources Colliers International 17
Yangon *Sources Colliers International 18
Vietnam is the only market that is currently thriving as it comes out of a 8 year slump in real estate values. Tourism provides positive information of the countries potential and while the popular areas are the cities of Hanoi and Ho Chi Minh, the Da Nang location in the centre famous for R&R of the American Army during the Vietnam war is now a rising economic zone with luxury resorts dotting the beaches. 19
Hanoi Overview - As the present economic situation is relatively stable, real demand is growing sustainably, credit flow to properties are well controlled, the real estate market in 2017 is expected to become a picture with many bright and lively colors Demand Strong Foreign interest due to high annual rental yield for some high-end apartments in major cities currently at 7 to 8 per cent. Sales Developers continue to enjoy good take up rates for newly launch development *Sources CBRE Research 20
Philippines sees a transition by its new President challenging existing government agencies to do more for their citizens. Capital city Manila continues to grow as a mega city with the National Capital. Region including Manila having a total population exceeding 40 million. That volume and business has resulted in major new projects but the volume has shrunk as the real estate economy is reacting to the economic slow down. These statistics give the story. 21
Manila First time home buyers to get interest free loans Home Mortgage Relief Act 2014, any interest amount paid can be deducted from gross annual income and offset on income tax payment. Manila Metro population 14-15 million and 30 million in the surrounding NCR National Capital Region. Growth in areas outside of the CBD is sustaining the condominium market resulting in an expected drop in rental by 1-3% for CBD areas. *Sources Colliers International 22
Manila Trump Tower Manila *Sources Colliers International 23
Malaysia remains an ongoing property economy with a lot of data driving different genres of real estate. Kuala Lumpur like Manila remains a magnet for young people to come to work here. Population of greater Kuala Lumpur is targeted to grow from 7.5 to 10 million by 2020. 24
Kuala Lumpur Market Overall prices remain steady despite flat sales figure Supply - Most developers are launching more affordable units price between USD 100,000 to USD 200,000 Challenges Low approval rate for bank financing remain the key issue for the property sector. *Sources Property Guru 25
Singapore remains a tight little island that punches above its weight due to the policies of the founding Father, Lee Kuan Yew. Today the island s people are well housed, (98% own their own homes) and well looked after in a clean bright city. Headwinds in Singapore are few but as the worlds economy moves to digital, the government is looking to create a new breed of enterprising citizens who can use the Internet of Things (IOT) to improve their lives. That means moving away from the comfort zone. There will be challenges but certain broad brush strokes like a new giant port in Tuas and the development of new assets out of old business that are phasing will see Singapore go through a change in fortunes. 26
The relationship with Malaysia for Singapore is crucial as Singapore needs the hinterland of Johore. Therefore, there are moves afoot on both sides to accelerate cooperation. We can expect the high speed rail to see more joint efforts to integrate the economies. 27
Singapore Singapore's residential property market is getting mixed signals from prices, sales, rents and developers' land purchases. Market Some analysts see signs of a gradual recovery, as end-users come off the sideline as government move to tweak property market cooling measures has improved sentiment. Supply nearly 37,000 of uncompleted private units in the pipeline and nearly 16,000 of those haven't been sold yet. *Sources CNBC 28
As you can see, I am positive about ASEAN. Countries with poor regard for rule of land law will have to change or become less valuable than their peers. The IOT is a game changer for the region as logistics, payment and tolls become electronic. There will always be interaction between ASEAN as the region becomes smarter about opportunities in each others backyards. 29
So how Does all this help you as agent? 30
There is a learning curve that comes out of understanding the other markets. Most joint platforms are unequal partnerships with the rich overseas partner bringing his own judgement calls to the new market. That results in failure to integrate. Joint agencies are popular for marketing and partnerships can take up from 5 to 7 years for successful integration. The new incoming partner has to learn to adjust to a less than perfect environment and then push for cleaner land laws. Working with the government agencies helps. 31
Thank You 32