The Gili Islands, Sabah, Danang, Ulaanbaatar and Yangon are Property Report’s picks for the year
“Rich investors in places like Singapore and Hong Kong are looking at the prices in markets such as Vietnam and Sabah in Malaysia and saying, ‘for those prices it is worth a punt’,” says Nicholas Holt, Asia-Pacific research director at Knight Frank. “Unlike in the West where housing bubbles and recessions have taken their toll, real estate is still seen as a very safe investment here in Asia and speculators would rather see their money doing something productive than having it lie dormant in a bank account.”
Several caveats obviously apply to the markets in some of the region’s top emerging destinations for real estate, but the prospect of tremendous advantages and financial returns, which could potentially surpass those in established Asian markets, is attracting a new influx of investors willing to take the plunge.
“Property in these emerging markets – with the notable exception of Myanmar, where prices are currently very high – tend to be significantly lower than in core destinations such as Singapore and Hong Kong,” says Desmond Sim, head of research at CBRE Southeast Asia. “Therefore it is much easier to get first-buyer advantage as these markets are not saturated yet, which is why rental yields can be attractively high.”
Gili Islands, Indonesia
Barely a decade ago the Gili Islands were one of Indonesia’s best-kept secrets. These days, however, the idyllic archipelago of three small islands – Gili Trawangan, Gili Menlo and Gili Air – off the northern coast of Lombok is staking its claim as one of the nation’s hottest investment destinations.
All motorised transport is prohibited on the Gili Islands by local ordinance while buyers can expect to pay 10 to 20 times less than they would in Bali for sea-view plots.
Despite its comparative value at present, experts believe that now is the time to invest on Gili Islands. Property values have risen sharply in Lombok year upon year and, with the island’s new international airport servicing daily direct flights from Singapore, Perth, Kuala Lumpur, Johor Bahru, Bali, Jakarta and other parts of Indonesia, the archipelago’s popularity as a destination shows no sign of waning.
As more investors begin to discover the Gili Islands, the market is expected to respond accordingly. Developments such as BASK on Gili Menlo and Aston Beach Resort Gili Trawangan enjoy prime beachfront locations and feature international quality design values. Meanwhile, a deck of new projects is in the works as supply chases demand for upscale villas and residences.
“The Gili Islands offer a completely new lifestyle experience, especially for long time visitors to Bali looking for a rustic, uncrowded island oasis,” says Dan Miller, head of JLL’s Bali office. “We are not going back to basics; we are simply going back to nature.”
PROS: Incredible location, perfect for beach lovers; Similar lifestyle to Bali at a fraction of the price.
CONS: Limited land on archipelago. Nearest airport is on Lombok, which involves a boat journey and a fairly lengthy transfer by road.
PROPERTY PICKS:
BASK Gili Meno
Billing itself as a “new concept in contemporary island living”, this resort/beach club/villa development was spearheaded by George Gorrow. Gorrow, an award-winning creative director who has previously worked with clients such as DJ Steve Aoiki and Black Eyed Peas main-man will.i.am, has created an aesthetic that is contemporary but takes inspiration from local fishing villas with their thatched roofs and bamboo frames.
Price range: USD220,000 to USD900,000
Average unit size: 141 sqm
Kelapa Luxury Villas
A freehold development that offers one- to six-bedroom villas, the Gili Trawangan-based project features landscaped tropical gardens and private swimming pools at each of the villas. Owners have access to a range of amenities including complimentary membership to the Trawangan Club, with its tennis club and gym, and barbecue and massage services.
Price range: TBC
Average unit size: TBC
Sabah, Malaysia
Sandwiched between the imposing bulk of Mount Kinabalu and the crystalline waters of the South China Sea, Sabah enjoys one of the most advantageous locations of any in the region with typical prices for land of less than USD3 per square foot.
“I’ve been around, and I still firmly believe Malaysia is the best country in the world and Sabah one of its finest assets,” comments Christopher Boyd of CBRE Malaysia. “What’s more it is even more accessible now that there are an array of long-term residence options such as the ‘Malaysia my Second Home’ (MM2H) scheme (an international residency scheme enacted by the Malaysian Government to allow foreigners to live in the country on a long-stay visa of up to 10 years) to attract expats. Sabah is still under-recognised and has enormous growth potential.”
Adding to its lustre is a solid transport infrastructure and an international airport that is second only to Kuala Lumpur airport in terms of the number of routes in and out.
Sabah’s leisure options, meanwhile, are formidable, with some of Malaysia’s best golf courses on its doorstep and some of its most awe-inspiring diving and nature spotting to be found along its coastline and in its fabled virgin rainforests.
With tourist numbers booming and KK poised to become the main hub for Malaysia’s oil and gas industry due to Sabah’s substantial offshore reserves, demand is almost guaranteed to grow. This will necessitate the construction of new grade A offices, quality housing, infrastructure such as high end medical centres, F&B outlets and other retail facilities such as quality shopping malls and supermarkets.
PROS: Great links to other parts of Asia and Malaysia via Kota Kinabalu International Airport; Outstanding lifestyle amenities; Solid economic grounding (booming oil and gas sector) that looks likely to keep the state on an upward curve meaning stability of investment.
CONS: Malaysia vulnerable to political tensions and ethnic strife; Government attempts to make housing affordable have led to oversupply at times.
PROPERTY PICKS:
Pacific City, Kota Kinabalu
Offering unparalleled views over the South China Sea and convenient access to the airport and the amenities of Kota Kinabalu, this condo project looks set to be one of the most prestigious addresses in Sabah.
Average unit price: USD209 per square foot
Average unit size: 210 sqm
Kudat Riviera, Kudat
rises just 32 private residences, all of which flank a pristine shoreline, while facilities include the Champagne and Caviar Sky Bar, floating spa and various fine dining restaurants.
Price range: USD500,000 to USD3.9 million
Average plot size: 3,750 sqm
Danang, Vietnam
Developers have long pitched Vietnam’s fourth largest city as Asia’s next luxury hotspot to rival established favourites such as Phuket and Bali. And with its 19-mile stretch of beach on the South China Sea and proximity to prime tourist draws such as the UNESCO-listed ancient port of Hoi An, that confidence looks to be well-founded.
Rebounding in 2014 after the collapse of real estate market in Vietnam five years ago, much faith is invested in turning Danang into an international-class leisure destination; with championship golf courses designed by Scottish star Colin Montgomerie and Australian legend Greg Norman the centrepieces of villa-led developments by major Vietnam players Indochinaland and Vinacapital.
And with villa sales picking up again and a host of new ‘condotels’ and other developments slated for the city’s long shoreline, a mood of positivity has well and truly returned to the property scene in the area.
“As there is limited supply, the outlook for quality residential projects looks good conditioned to continued strengthening of the local market,” says Matthew Koziora, director of sales and marketing at Vietnam-based developer VinaCapital Real Estate. If the Government approves foreigners owning real estate in Vietnam, offshore interest in Danang and the central coast will improve as currently pricing offered is very competitive against their regional peers.”
PROS: Thriving city with the best infrastructure in Vietnam; Fantastic coastal location with one of the world’s best beaches on the doorstep; championship golf courses and UNESCO-listed Hoi An among the attractions.
CONS: Foreign ownership still difficult to achieve without registering a company or having a Vietnamese spouse; concerns about inflation remain with the possibility of another housing bubble despite government measures to tackle the problem.
PROPERTY PICKS:
Ocean Beachfront Villas
Adjacent to the Greg Norman-designed Danang Golf Club, these villas range in size from one to five bedrooms. Facilities, meanwhile, include tennis courts, a swimming pool and a beach club.
Average unit size: 746 to 1,037 sqm
Price range: USD2,547 to USD2,484 per sqm
Vinpearl Luxury Danang
Enjoying a prime location on Non Nuoc Beach, these 39 villas boast luxurious trimmings. Owners can also enjoy the facilities at the adjacent Vinpearl Luxury Hotel.
Average unit size: 348 to 526 sqm
Average unit price: USD1.2 million to USD2.8 million
Ulaanbaatar, Mongolia
Sandwiched between the twin behemoths of China and Russia, Mongolia has often struggled to make its presence felt on the world stage. The landlocked nation, however, has dug deep to become a perhaps unlikely star among Asia’s emerging real estate markets.
Over the last few years, the country has enjoyed double-digit growth. In 2010, the Mongolian stock exchange grew 121 percent; the following year, GDP increased by more than 17 percent. Growth has decelerated significantly in recent years. Nevertheless, the nation’s economic prospects still appear to be enormously positive.
“All the fundamentals are in place, which is vital,” comments Stuart Evans of Mongolian Properties. “Yields have been extremely high over the last ten years. Some developments are actually offering guaranteed yields of 12 percent over two years, which is hugely favourable.”
Unlike in many other emerging markets, foreigners have essentially the same rights as locals when it comes to ownership. They are issued with an immovable property certificate, which essentially grants full freehold rights in a development.
With heavy traffic causing frequent gridlock and amenities such as shops, restaurants and supermarkets restricted to the city centre, Ulaanbaatar certainly isn’t for everyone. Indeed, the majority of investors are buying to rent to expatriates in the mining industry.
In the view of experts, however, the country represents a fantastic opportunity for investment.
“It has been static for the last couple of years but in the long term it is as good as any other market,” agrees Christopher De Gruben of MAD Investment Solutions. “Real estate is one of the best investment options there is. It is far removed from politics, protected by law and there will always be a demand for it.”
PROS: Stable democracy with highly beneficial ownership laws for foreigners; economy set to kick start with expansion of mines.
CONS: Lack of quality lifestyle amenities (retail, restaurants, leisure facilities) in Ulaanbaatar; long, cold winters; many inexperienced developers so stringent research is essential.
PROPERTY PICKS:
The Village@Nukht
This ambitious project will be located in the Nikht Valley, one of the most prestigious areas in Ulaanbaatar. As well as luxurious units, the development will feature a range of lifestyle amenities such as shops and restaurants.
Average unit size: 175.5 sqm
Average unit price: USD2,600 per sqm
The Olympic Residence
This mixed-use development is set to be one of the most sought-after addresses in the capital’s CBD. It features 86 luxury residential apartments and four floors of grade-A commercial space.
Average unit size: 276 sqm
Average unit price: USD3,371 per sqm.
Yangon, Myanmar
As foreigners flock to Yangon to capitalise on its relative openness, property prices continue to explode due to the imbalance between demand and supply. Indeed, annual rents in the city’s few office towers are more than USD100 per square foot – more expensive than equivalent space in downtown Manhattan.
If these factors – booming prices, virgin market and a giant supply gap – sound attractive to real estate developers and investors, that’s because they are. However, the potential gold rush in Burma isn’t all that meets the eye.
“It is not legally possible for foreigners to own any property in Myanmar,” says Richard Emerson of Savills Myanmar. “Those living here are only allowed to lease residential accommodation for one year. The market looks artificially high currently due to the very limited supply of property that can be bought. The buyers are all wealthy locals who purchase for investment in to rent out to foreign tenants, and only occasionally for occupation.”
Foreign investment in property is possible – but presently only for companies taking the long view. Firms looking to develop large-scale projects are allowed to lease land for 50 years with two additional 10-year extensions, but they are required to apply to the Myanmar Investment Commission and undertake a lengthy approvals process.
A condominium law, which is slated to permit sales to foreign buyers of up to 40 percent of apartments above the sixth floor, has been proposed. It remains, however, in the very early stages of drafting, so the waiting game will no doubt continue for some time to come. Indeed, much hinges on the result of the country’s 2015 general election.
PROS: Tremendously high returns on investment presently; enormous untapped wealth in the country
CONS: Almost impossible for foreigners to buy property at present; real chance of political instability or return to military rule
PROPERTY PICKS:
The Atrium
Featuring an appealing – and unique for Burma – modern architectural design, this development will feature a range of unit types. Leisure facilities meanwhile include an outdoor swimming pool and a movie- screening room.
Average unit size: TBD
Average unit price: TBD
68 Residence
Conveniently located in the heart of Yangon and boasting views towards the iconic Shwedagon Pagoda and the city’s Inya Lake, this development is likely to set a new standard for housing in Myanmar.
Average unit size: 1,562 sqft
Average unit price: USD400 per sqft
(Source: http://www.property-report.com/asias-top-emerging-investment-spots-in-2015/)
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