HK investors raise a toast to East
Hong Kong investors, for long buyers of properties in the United Kingdom and Australia, are turning their gaze from the West to the East and snapping up Asian realty, attracted by higher rents, lower capital outlay and longterm investment prospects.
Until now, they used to buy homes in the UK and Down Under so their children could stay and pursue higher education in those countries. One more reason was, it was considered good investment.
A 500-square-feet flat will cost 400,000 pounds ($533,000) in London and around A$ 600,000($455,300) in Sydney, Australia — not a small investment for average Hong Kong investors.
These days, they are investing in Thailand, Malaysia and even Cambodia. “A 500square-feet in Thailand costs about $193,500 while a home of 1,300 square feet in Malaysia costs around $735,000,” said Martha Yeung, overseas department director, Century 21 Services Ltd.
“A prime 300-square-feet studio in (Cambodia’s capital) Phnom Penh costs about $100,000 but can generate monthly rent of around $1,500, translating into a net rental yield of 7.5 percent, after deducting all the fees and charges.
“This is very alluring for average Hong Kong investors who possess moderate investment capital. They read our advertisements, attend sales promotions and decide immediately to invest in Cambodian properties,” said Yeung.
The current Cambodian property market has a good dynamic as supply of residential flats is limited while demand for properties is soaring due to the growing expatriate population in Phnom Penh, she said.
Yeung has facilitated nearly 20 investment deals from Hong Kong investors for a studio apartment project in Phnom Penh. She expects more Hong Kong investors to buy properties in another residential project that is scheduled to be launched next month or in October.
Yeung is optimistic of the Cambodian home market compared to other markets in the Indochina region. Property investment markets in Myanmar and Laos are still closed to Hong Kong investors while Vietnam’s capital controls hinder market development there.
US-based real estate advisory firm Colliers International Group says the UK’s unexpected vote to leave the European Union in a referendum held on June 23 will make Asian properties more attractive as an asset class.
“Brexit will probably lead to further downward pressure on already very low global bond yields, increasing the relative attraction of the 3 percent to 6 percent yields on core Asia pacific investment property,” Colliers International Group said in its research report in June.
“The vote may mean that real interest rate (nominal interest rate minus inflation rate) will likely stay low for longer than we have assumed up to now, to the near-term benefit of Hong Kong and other regional markets,” the report said.
Financial markets now expect the US Federal Reserve may postpone any interest rate hike until the end of this year because the Brexit decision may unleash more economic uncertainty.