Going Abroad To Shop

Source : The Sunday Times, Nov 18, 2007

If you've been priced out of the Singapore property market, don't despair. You can find good value for money abroad, even in upscale markets like Japan.

THERE is no denying that the boom in Singapore's property market, which has risen to frantic heights during the past six months, is taking a bit of a breather.

But for those whose appetite for properties has been whetted in the recent months, don't fret, there is a veritable ocean of real estate out there and plenty that can give you a bigger bang for your buck.

Global statistics show that Asia-Pacific markets are leading the boom in housing prices worldwide. In contrast, prices in Europe are growing at only a moderate pace.

Singapore, Hong Kong and Japan

ALL three of these markets have enjoyed strong surges in property prices.

Online research house Global Property Guide said home prices in Singapore shot up 21.05 per cent for the 12 months to June, up from 6.08 per cent in the previous year.

In Hong Kong, they rose 8.78 per cent during the same period, after suffering a decline of 0.65 per cent in the year before.

Land prices in Japan's six major cities increased by 7.75 per cent over the period.

In fact, prices have hit record highs in all three markets.

Condos have been sold in Singapore for $5,000 per sq ft (psf) while Tokyo units average around $3,400 psf. Hong Kong's luxury apartments average $3,100 psf, although those at the very top of the range have fetched more than $7,800 psf.

To track down investment homes that are easier on the pocket, investors have been flocking to emerging markets such as Malaysia, Thailand and Vietnam.

Opportunities even in developed markets

EMERGING markets might seem like an obvious choice for home-seekers, but even in developed markets, there are investment opportunities.

As Mr Tim Murphy, the managing director of Hong Kong-based investment firm Intellectual Property, puts it: "Some markets will give you growth because they are emerging. Others will give you growth because of where they are in their property cycles."

He points to Japan, generally considered a mature market with not much price growth. Recently, prices have swelled, especially outside Tokyo. On the outskirts of the city, it is possible to find good properties that are likely to appreciate in value.

Australia, in contrast, has enjoyed several years of solid appreciation.

Homes in Melbourne and Sydney have become very expensive and rental yields have dropped.

The market in Perth in Western Australia has been even more frenetic, with prices climbing 30 per cent on average over the past 12 months.

Thus, even though analysts expect further price increases, growth might moderate, with less potential for upside.

For foreigners, who are allowed to buy only new developments from developers, the relatively high interest rates and rising Australian dollar will make Australian homes more costly.

"Whichever market you're interested in, look for cheap interest rates and high rental yields," advised Mr Murphy, whose company has transacted properties worth more than US$85 million (S$123.5 million).

Tips for overseas homebuyers

IF YOU are keen to invest in foreign properties, note the following points:

- Do your research, understand the market and do not jump on the bandwagon to follow current trends as these might change.

- Remember these key words when researching a market: legals, borrowing, liquidity, yields, tax and currency.

- Buy homes from established developers with good track records.

- Look for properties that the local people will want to rent as these will offer higher rental yields.

- Always look through all legal documents and hire a trustworthy lawyer.

- Be an early bird. Invest early if you can, to take advantage of launch prices, which are typically lower.