A decade after the 1997 Asian Crisis erupted, most housing markets in Asia are well on their way to recovery.

Boosted by strong economic growth and strong local and international demand, residential real estate prices in the Philippines, Singapore and South Korea rose by more than 10% in nominal terms y-o-y to Q1 2007.

In Hong Kong, after registering price falls in early 2006, the over-all residential price index is back in positive territory. The index rose 5.2% y-o-y to March 2007. However this is significantly lower than the annual price increases to the first quarter of 2005 and 2004, at 21% and 28%, respectively.

No bubble this time

Although property prices in most Asian countries are still below their peak levels, rapid price appreciation has taken place over the past five years, leading to renewed fears that a speculative property bubble is forming in several Asian countries.

The fear is not unfounded; one has only to recall Asia’s spectacular and disastrous property bubbles of the 1990s.

However, the recent price increases are actually recoveries from the previous slump caused by the Asian crisis and other phenomena.

As of Q1 2007, property prices in most Asian countries are in fact still below their peak levels in real terms.

Strong housing demand

Current economic and monetary conditions suggest continued strong demand for housing. All economies affected by the Asian Crisis grew by 5% or more in 2006. GDP growth from 2002 to 2006 has been markedly stronger than during the crisis period – 1997 to 2001, although slower compared to the tail-end of the “Asian Economic Miracle”.

As a result of financial and monetary reforms implemented after the crisis, banks and other financial institutions are in much better shape now. Asia’s mortgage market is set for a boom. This is despite the fact that mortgage lenders are more cautious of over-exposing themselves to particular sectors (some pundits worry that banks are actually being too cautious).

Despite recent interest hikes, in line with global interest rates, base interest rates for mortgage lending are generally lower now than before the crisis.

Socio-economic conditions also point to continued strong demand for residential properties. Strong urbanization and population growth has led to high population densities in several Asian cities.

In view of the relatively restrained dwelling price rises, strong economic growth and banking sector caution and healthy yields to be enjoyed on properties in Asia, talk of another bubble seems far-fetched.

Other problems

A more pressing concern for Asian economies is the continuation of reforms to improve real estate efficiency and transparency. Transaction costs remain high and the property registration is still cumbersome in several countries.

While Malaysia is encouraging foreign property buyers, Thailand’s military junta is pushing them away. Thailand announced that it is completing a crackdown on foreign companies established for the sole purpose of buying landed properties. While the motivation for this move is unclear, the signal is clear “foreigners are not welcome.” Political uncertainty and policy flip-flaps by the ruling junta are undoubtedly hurting the real estate market.

In the Philippines, proposed property market reforms are languishing in congress. These laws include the establishment of a centralized agency for registering property and a standard property valuation system.

Full Report:
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Email: prince@globalpropertyguide.com

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Technorati Tags After, Asian, Crisis, decade, Property

Affordable homes in Malaysia. In an effort to open up their economy, Malaysian Property Incorporated was in Chennai promoting residential and commercial property in Malaysia. Under Malaysia my second home project nris can invest in Malaysia, and enjoy the benefits like any other citizen. And what is more, a 1200 sq ft apartment in KL city might cost you around 1 cr, now that is cheaper than Poes garden.

Technorati Tags Affordable, HINDU, homes, Malaysia, MATTERS, NDTV, Property

You have located the investment property that you feel has what you want. Before you get involved with the detailed analysis of income, expenses and financing, you need to find out more about it. Although our property investment evaluation tool (which you can download it free when you subscribe to our newsletter at http://reijb.com) contains most of the items that are of interest to you, let’s discuss some that are not on the analysis, and see why they are important.

Age of the property

When the property is older, repairs or appliance replacement expenses may be expected in the near future. This should be taken into consideration in the price you are willing to pay for the property. Do not pass up an older building just because some repairs or replacement are needed. Those expenses can be written off through tax deduction. Assuming you are in a 28 percent tax bracket, for example, you are only spending 72 cents for repairs – Malaysia government is contributing the other 28 cents. This makes the cost of repairs quite inexpensive.

For example, say your taxable rental income of a new investment property is RM1000. You are supposed to pay a tax of RM280. But you spent RM100 for repairs when you first bought the property. Now your taxable rental income become RM900 and the tax you need to pay is RM252. The RM28 saving in your tax is exactly a 28% discount on your repair cost!

Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows.

Rental history

Look at a property that is a few years old. Has it enjoyed a high occupancy level over the past few years? What happened to its occupancy or rent level during the period of economic slowdown?

There are three easy and inconspicuous ways of finding out whether or not the building is fully leased. We stress inconspicuous because you do not want to alert the tenants that something is going on,

The least accurate check is to look at the mailboxes. Blank slots may indicate vacant apartments. A more accurate check is to look in the meter room where each apartment is individually metered for electric. See how many meters have been turned off by TNB, indicating those apartments are unoccupied. The final check is designed for the night owl. Drive by the building at three or four o’clock in the morning and see if the parking spaces are filled. This test won’t work during the day because most of the tenants are usually gone. You can also observe how many units are lit on after eight o’clock at night if you don’t like to be a night owl.

This inspection also gives you an idea of the quality of tenants in the building. When the parking lots are filled with motorcycles, for instance, don’t expect the building to be occupied by wealthy, retired people.

Neighborhood

What kind of properties surround the property you are considering acquiring? Is yours the only well-kept building on the street? You may have trouble keeping it that way. Deteriorating areas are usually followed by difficulty in renting apartments and, therefore, vacancies climb.

Building condition

What is the physical condition of the building? Your sell and purchase agreement (SPA) may give you, at your expense, the option of having at least a termite inspection made by a licensed inspector. Are the apartments well maintained? This will not only tell you what repairs you may be facing, but will also give you an indication of the type of tenants that are renting the apartments.

Amenities

Amenities such as clubhouse, swimming pool, tennis courts, and laundries affect how you’re your property can compete with other rentals in the area. Major amenities, such as tennis courts and swimming pools, however, may not be justified on smaller complexes because in return the management cost and sinking fund required may be relatively higher.

Parking

In today’s society, parking has become a serious problem. Almost every family in Malaysia has at least one car. Unless the building you are considering has at least one parking space for each apartment, plus a proportionate number of “visitor” parking spaces, you’d better think twice. Two parking spaces per unit are desirable, but not necessary.

If the complex is situated on a mojor street, do all or part of the parking spaces front on the street? If they do, what happens to your parking if the street is widened?

Furnished or unfurnished

There is something to be said both for and against furnished apartments. First, the good news. Furnished apartments usually demand a higher rent.

For the bad news, furnished apartments deteriorate more quickly. The furniture will not last too many years and tenants will not be as careful with your furniture as they are their own. Tenants in furnished apartments tend to be less stable. It’s easy for them to pack up and move, so they do. A tenant who has to hire a moving company will probably think twice, unless circumstances other than finding a better place for less money are his motivating factors.

These basic details concerning the property you want to purchase will add to your evaluation of the investment. You are now ready to gather the income, expense and financing information from the seller and make your own analysis of the property to determine how much you can afford to pay for the investment property that you wanted.

Read more about real estate investment tips at http://reijb.com

We write regularly about real estate investment. Some of our featured articles include:

“Why apartment can be the best real estate investment?“

“How important is location to an investment real estate?“

Technorati Tags Before, check, details, Investment, Property