Property experts look to Asia as offering best real estate investments for 2009
A new survey indicates where property investment experts reckon you can find the best bargains and also reveals where they are likely to buy in 2009.
Asia looks a better bet than other parts of the globe, but for cash rich individuals, London also offers bargains, according to the survey by Reuters.
Tim Murphy, Hong Kong-based founder of IP Global, owns over 100 apartments and houses around the world and started a firm that finds residential property for clients.
'I've just come back from a trip to London and had a very interesting week. In the last few days there are even graver concerns about the UK economy and banks. But there are some incredible property deals, especially for built property,' he said.
'Developers want to unload their last assets. For the right deal, you can get anything from 35 to 60% discounts from a year ago. And the currency is a huge advantage. In US dollar terms, a property that was $2 million a year ago is $600,000 now,' he explained.
In Asia, he recommends keeping an eye on Hong Kong and China. 'Hong Kong will have a very difficult first half of the year. If there are bargains, I'll buy, not now, but maybe after the summer. I'm quite optimistic long-term. Rents are coming down, but the cost of funds is coming down much more. If you buy a HK$2 million to HK$5 million dollar property the yield is 4 to 6%,' he said.
David Edwards, Asia director for LaSalle Investment Management, the property funds arm of Jones Lang LaSalle said he will buy in 2009 and he is looking at the more volatile, faster correcting markets such as Hong Kong and Singapore, which he expects to bottom first.
'It's too early to say if it will be the second half of 2009 or the first half of 2010. There's not enough visibility given the gyrations of panic. But it's a good idea to build an equity position and get ready,' he explained.
Aaron Fischer, head of property research at CLSA, is not sure if he will invest this year. 'I just sold a house in Australia. If I were to pick countries with the smallest declines, they would be Japan and Indonesia. In Japan house prices don't move,' he said.
Brett McCarthy, fund manager at Sydney-listed Challenger Kenedix Trust, reckons that the Sydney market is a good prospect. 'The city is going to grow for a long time and it's geographically very constrained by national parks and mountains, so in the long term, you think the property price would go up in Sydney, but of course in the short term, some parts of the market have got a lot of pain,' he said.
Robert Lie, Hong Kong-based Asia head for Dutch property investment firm Redevco, predicts that Asia will recover before other regions. 'I'd say invest in China, but as a foreigner you have to live there 12 months before you can buy. I think Hong Kong prices will adjust pretty quickly and I do believe that if the global economy revives, Asia will recover first. There's inherent scarcity in the market for land and apartments. And high-end prices will drop significantly, but they'll come back,' he said.
Simon Lyons, London-based joint CEO of Enstar Capital, revealed he has recently bought an apartment in the Swiss Canton of Vaud. 'That outsiders can buy at all in Switzerland is a relatively new phenomenon. A limited number of property permits are granted to non-residents each year and only certain properties, primarily in tourist areas, are eligible for purchase, meaning demand is always ahead of supply,' he explained.
Mark Callender, UK-based Head of Property Research, Schroder Property Investment Management, said it is not the right time to buy. 'UK housing prices look about halfway down right now, so it's not quite the right time to buy. And the expectation is for prices to drop by another 10 to 15% this year,' he said.
