As the poor price growth of Asian Pacific property is attributed to a disappointing economic performance, investors are able to capitalise on a post-Brexit world by investing in UK property.
- Hong Kong & Southeast Asia experience poor price growth in 2016
- Uncertainty remains for economic growth in 2017 post Brexit and Trump election win
- Asian investors increasingly drawn to UK property market
2016 saw a year of poor price growth for the Southeast Asian and Hong Kong property industries. A combination of cooling measures including an increase in Stamp Duty, combined with a disappointing economic performance were among the main reasons for the lack of growth, which also affected Indonesia and Thailand, two of the region’s top performing markets.
Alice Tan, Head of Consultancy and Research for Knight Frank in Singapore commented; “Almost all segments of the property market, residential, commercial and industrial, have experienced weaker performance in price and rentals, hitting new lows in the third quarter of 2016 since their previous peaks,”
Tan does however predict some sectors will perform better in 2017 although the general outlook for 2017 economic growth remains uncertain. Experts anticipate the effects of Brexit, Trumps election win and the likely demise of the Trans Pacific Partnership (TTP) will all have a substantial impact, while the slowing Chinese economy is expected to have an effect on Singapore’s economic growth and business sentiment.
Sarkunan Subramaniam, Executive Director of Knight Frank Malaysia, anticipates another subdued year for Asian property in 2017, with developers facing lower demands. As a result, investors are increasingly looking overseas for the best deals, China overtook the US to become the largest cross-border real-estate investor in the third quarter of 2016.
“Investing overseas is a strategic move for most mainland investors and we expect few long-term structural changes,” said Stuart Crow, JLL’s Head of Asia Pacific Capital Markets. Those from Hong Kong are especially attracted to UK property investments, viewing the UK as a safe haven that offers stable cash-flow returns, especially after the Brexit vote, which saw the sterling exchange rate plummet and render UK property investments less expensive.