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Top 10 Asian Cities For Real Estate Investment

Brent Radcliffe San Francisco Chronicle 10/19/2011 02:19
Top 10 Asian Cities For Real Estate Investment - Real Estate - Property - Business - Asia - investment

Emerging markets are on a building tear, and nowhere is that more evident than Asia. Flush with capital from years of high savings rates and with a population seeing substantial increases in wealth, countries in the region have focused on providing the housing, infrastructure and commercial buildings needed for the millions of new urbanites that flock into cities from the countryside each year.

Low interest rates and rapidly growing economies, two situations that are strikingly similar to the ones that created America's home bubble of the 1990s and 2000s, are also at play. Cheap capital has become available to a larger portion of the population as they build up wealth, and a demand for housing that exceeds supply jacks up the price of homes on the secondary markets. This is a post financial crisis boom that has generally bypassed developed countries, especially in the United States.

Households in advanced economies have taken to deleveraging, and real estate in those countries has suffered as a result. The construction industry will be more of a drag on gross domestic product (GDP) than a boost, and a lack of growth in the sector may keep unemployment high, in both construction and related industries. Governments in several Asian countries have taken measures to cool down their housing markets. While it has been over a decade since the 1997 Asian financial crisis, policymakers still remember the role that real estate played in dragging economies into the gutter. This is a good thing, though. China teeters on the edge of a housing bubble thanks to its monetary policy (keeping the yuan low in order to encourage exports) pointing capital toward real estate investment, and because its growing middle class wants a piece of the pie.

"The Knight Frank Global House Price Index," in the second quarter of 2011, showed that several Asian countries were up over 2010: Hong Kong (26.5%), Taiwan (12.7%), Singapore (6.7%) and Malaysia (6.5%). While these figures seem high (Asia has had the highest home price inflation for the last seven quarters), they also point to government policies aimed at cooling down property inflation gaining traction. Singapore's 2009/2010 Q2 growth rate was 37%, China's 36.8% and Hong Kong's 24.9%. According to the "Knight Frank Prime Global Cities Index," which tracks luxury property prices, Asian cities continued to dominate the top 10 ranking. Hong Kong's prime real estate grew 16.1% over 2010, Beijing by 8.9%, Shanghai by 7.7% and Singapore by 3.4%.

According to "The Urban Land Institute's (ULI) Emerging Trends in Real Estate Asia Pacific 2011 survey," the Asian cities with the best investment prospects are:

1. Singapore
2. Shanghai
3. Hong Kong
4. Beijing
5. Guangzhou, China
6. Ho Chi Minh City, Vietnam
7. Tokyo
8. Taipei, Taiwan
9. Jakarta, Indonesia
10. Kuala Lumpur, Malaysia

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