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Asian Bargain-hunters on the Prowl - Review Asia Magazine
July 02, 2007
Asian Bargain-hunters on the Prowl
Amid the gloom in the US, savvy investors get to cherry-pick American and Canadian assets, even as Latin America starts to look enticing.
By Wendy Leung | July 2007
The real estate market in the United States has given property owners and investors little to cheer about over the past year.
Housing starts and sales of previously owned homes tumbled in 2006, while average home prices edged up 5.9% from a year before, growing at a far slower pace than the 13.2% jump in 2005.
Combine that with rising mortgage defaults, and many are bracing for a prolonged housing slump and a weakening US economy. But depending on whom you ask, the glass is half-full.
Some analysts note the housing slowdown follows a five-year boom, and while prices are rising more slowly, they are now more in line with historical norms.
Global investments strategist Andrea Eng, who has worked for some of Asia’s wealthiest, including Hong Kong tycoon Li Ka shing’s son Richard Li Tzar-kai, believes there is still ample reason for Asian investors to buy US property.
“The panic isn’t happening in hot areas, such as San Francisco and New York”, Eng said, adding that there was little to suggest the mortgage problems will cause wider economic damage.
When it comes to riding out market uncertainties, Asian investors generally take a long-term view than their local counterparts, since they tend to treat real estate as a tradable commodity, whereas North Americans do not, Eng said.
As some investors pull back, savvy global buyers are able to cherry-pick properties where they can find good value, she said.
North of the border, Canada’s property market continues its upswing, bolstered by robust economies in the country’s western region.
The oil rich province of Alberta neighboring British Columbia, which is experiencing a construction boom ahead of the 2010 Olympic Games in Vancouver, are attracting workers and investors from other parts of Canada, driving up property sales and prices.
Nationally, the Canadian Real Estate Association predicts existing home and property prices will moderate this year, rising an estimated 6.9%, compared with 11.1% in 2006, but it expects the housing market to remain strong over the next two years.
Amid jitters in the US, some investors are looking southward to hedge their bets.
Mexico, in particular, is winning the confidence of international buyers. The country’s real estate association signed an agreement with the US National Association of Realtors in October, aimed at standardizing their practices.
As well, according to the online property investment publication Amberlamb, many are hoping Mexico’s economy will prosper under its new president, Felipe Calderon.
In the Caribbean, the tax havens of Barbados and the Bahamas have traditionally attracted global properties investors, but the Dominican Republic is also gaining attention from international real-estate heavyweights, such as US tycoon Donald Trump, who recently announced he is building a US$ 2 billion luxury resort in that country.
Meanwhile, Brazil and Argentina are emerging as the property darlings of South America. Brazil’s economy expanded 2.9% in 2006 and, based on recent reports, sales of luxury apartments in Sao Paulo jumped 76% in the two years to 2005.
A surge in real estate is also taking place in Buenos Aires, where a growing number of foreigners are purchasing property, said Michel Koh, one of the largest buyers in Argentina and president of ApartmentsBA.
“Buenos Aires is a world-class city, yet the prices are extremely cheap compared with those for most capital cities around the world”, Koh said, noting that the average price of property in the Argentina capital is US$ 1,600 per square meter –roughly six times lower than in New York City.
Investors also enjoy low taxes, strong capital appreciation and cash flow from rents in the thriving tourist destination, he added.
Even so, Latin American property markets have yet to register on the radars of most Asian investors. Eng said they tend to stick with purchasing in Canada and the US, where many have received Western education and where they send their children for schooling.
Regardless of the market, she advised: “if you’re playing global monopoly, make sure you know the fundamentals. You could easily get burned by buying the wrong thing.”
July 02, 2007
Asian Bargain-hunters on the Prowl
Amid the gloom in the US, savvy investors get to cherry-pick American and Canadian assets, even as Latin America starts to look enticing.
By Wendy Leung | July 2007
The real estate market in the United States has given property owners and investors little to cheer about over the past year.
Housing starts and sales of previously owned homes tumbled in 2006, while average home prices edged up 5.9% from a year before, growing at a far slower pace than the 13.2% jump in 2005.
Combine that with rising mortgage defaults, and many are bracing for a prolonged housing slump and a weakening US economy. But depending on whom you ask, the glass is half-full.
Some analysts note the housing slowdown follows a five-year boom, and while prices are rising more slowly, they are now more in line with historical norms.
Global investments strategist Andrea Eng, who has worked for some of Asia’s wealthiest, including Hong Kong tycoon Li Ka shing’s son Richard Li Tzar-kai, believes there is still ample reason for Asian investors to buy US property.
“The panic isn’t happening in hot areas, such as San Francisco and New York”, Eng said, adding that there was little to suggest the mortgage problems will cause wider economic damage.
When it comes to riding out market uncertainties, Asian investors generally take a long-term view than their local counterparts, since they tend to treat real estate as a tradable commodity, whereas North Americans do not, Eng said.
As some investors pull back, savvy global buyers are able to cherry-pick properties where they can find good value, she said.
North of the border, Canada’s property market continues its upswing, bolstered by robust economies in the country’s western region.
The oil rich province of Alberta neighboring British Columbia, which is experiencing a construction boom ahead of the 2010 Olympic Games in Vancouver, are attracting workers and investors from other parts of Canada, driving up property sales and prices.
Nationally, the Canadian Real Estate Association predicts existing home and property prices will moderate this year, rising an estimated 6.9%, compared with 11.1% in 2006, but it expects the housing market to remain strong over the next two years.
Amid jitters in the US, some investors are looking southward to hedge their bets.
Mexico, in particular, is winning the confidence of international buyers. The country’s real estate association signed an agreement with the US National Association of Realtors in October, aimed at standardizing their practices.
As well, according to the online property investment publication Amberlamb, many are hoping Mexico’s economy will prosper under its new president, Felipe Calderon.
In the Caribbean, the tax havens of Barbados and the Bahamas have traditionally attracted global properties investors, but the Dominican Republic is also gaining attention from international real-estate heavyweights, such as US tycoon Donald Trump, who recently announced he is building a US$ 2 billion luxury resort in that country.
Meanwhile, Brazil and Argentina are emerging as the property darlings of South America. Brazil’s economy expanded 2.9% in 2006 and, based on recent reports, sales of luxury apartments in Sao Paulo jumped 76% in the two years to 2005.
A surge in real estate is also taking place in Buenos Aires, where a growing number of foreigners are purchasing property, said Michel Koh, one of the largest buyers in Argentina and president of ApartmentsBA.
“Buenos Aires is a world-class city, yet the prices are extremely cheap compared with those for most capital cities around the world”, Koh said, noting that the average price of property in the Argentina capital is US$ 1,600 per square meter –roughly six times lower than in New York City.
Investors also enjoy low taxes, strong capital appreciation and cash flow from rents in the thriving tourist destination, he added.
Even so, Latin American property markets have yet to register on the radars of most Asian investors. Eng said they tend to stick with purchasing in Canada and the US, where many have received Western education and where they send their children for schooling.
Regardless of the market, she advised: “if you’re playing global monopoly, make sure you know the fundamentals. You could easily get burned by buying the wrong thing.”
