HK in­vestors raise a toast to East

China Daily (USA) - - BUSINESS FOCUS - By OSWALD CHAN in Hong Kong oswald@chi­nadai­lyhk.com

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.

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