Property Investment in Asia Pacific
Believe it or not our world has become smaller. What? What do we mean that our world has become smaller? There is an unstoppable trend that is happening around the world. That trend is globalization. The emergence of internet, aviation, high speed rail technology has bring our world closer together. For example it will now take about 4-5 hours to travel from Singapore to Malaysia capital city in Kuala Lumpur. With the proposed new high speed rail, the estimated the traveling time will only take about 45-60mins. What does it imply? It means that it is not impossible for someone to stay in Kuala Lumpur but work in Singapore in the future. With internet technology it is also not impossible for that person to work in the train while traveling from Kuala Lumpur to Singapore. All these are quite possible.
In additional, the emergence trend of economic blocs e.g APEC, NAFTA, EU has also hasten the speed of globalization with trade barriers and tariffs coming down gradually. This has enable many companies to take advantage of the trade and tariff incentives to invest and to set up offices within the region. Hence the impending enhancement in trade and economic activities in the region will encourage travel, movement of financial resources, human capital and maybe technology transfer. What is the implications?
We will probably see higher rate of growth in these developing countries where flow of investment would be higher as businesses can enjoy cost benefits in operating in these countries. Of course currently there are risks involved that will the major stumbling block to the continuous growth. The major risk involve being a political one. While the recent economy data is quite encouraging however risks still exist in some these emerging markets.
Real Estate Investment in Emerging Markets
While the trend and data supports the economic growth in many of these emerging markets, however caution must be practiced when investing property in these countries. It is not to say we should not be involved in investing in these countries, however, the risk involved is relatively higher in these countries even though the prices of the properties are many times lower than in more developed economy. Therefore, know what you are going into, or alternatively choose to invest in a country or countries where risk is slightly lower.
Yes, high risk may translate to higher returns, but there is no guarantee this theory work all the time and may prove be painful for some who might have taken excessive risk. So look into the risk involved and weigh your options carefully.
In our next article we will discuss the country in South East Asia that in our opinion is an attractive to invest in and the reason for its attractiveness.