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OTP investments in Asia

Discussion in 'General Property Chat' started by JDP1, 13th Feb, 2016.

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  1. JDP1

    JDP1 Well-Known Member

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    I have recently returned from a trip to two Asian countries and people on the ground there tell me that OTP apartments are greatly preferred as the type of RE to buy amongst the locals- and that too the more trappings the better!- doorman, pool, gym, onsite restaurants etc.. It seems the opposite here- the locals tend to stay away from OTP and prefer established stock and the less amenities the more potential CG.
    The locals on the ground there swear by it and have made huge amounts of money ( im talking Sydney gains or more)- so it has worked for them.
    Does anyone know why this is? and what are the prospects of this (OTP in asia)to continue with slowing emerging market Asian economies? Im asking because im thinking of teaming up with other parties to buy RE there.
     
  2. imbi3

    imbi3 Well-Known Member

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    Asia is huge market. Which country are you referring to?
     
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  3. JDP1

    JDP1 Well-Known Member

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    Most likely singsporeat this stage because of the stability, laws, and relative lack of red tape in doinf business. Its also fairly close by which helps.
     
  4. hammer

    hammer Well-Known Member

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    There's a cultural shift to all things new and shiny throughout SE asia and China.

    That's why in Thailand/Singapore you'll see similar cars to what's available here but with more chrome and shiny...

    In some cultures there is also deep suspicion of used property. It's not uncommon for families to buy a perfectly good house, flatten it and build another perfectly good house in its place.

    This might, at least, be part of the reason.
     
  5. larrylarry

    larrylarry Well-Known Member

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    I have investigated and spoke with a friend who's RE agent in Singapore. He discouraged me from buying condominiums because they're overvalued. Commercial property remains viable. The government housing (not private with pools etc) in good areas with good schools are commanding at least a million. Have you stepped into a HDB flat? It's small. The scarcity factor and Chinese investment pushed the prices up according to my friend.
     
  6. big max

    big max Well-Known Member

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    I am an expert on Asian property so ask me anything here. Singapore property is way overvalued right now. May well fall 20% coming 2 years. But yes at the right valuation still great to buy long term.

    Same with HK.

    Rest of Asia be very careful at today's prices. Lots of supply and lots of hot money pumped things up. Stay away for now.
     
  7. JDP1

    JDP1 Well-Known Member

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    Thats quite significant..potentially dropping 20% in the next 2 years. Why do you think so? Their economy is strong, pop growth is healthy, underlying infra is good..all in all the fundamentals of sg do seem to support high re prices ?
     
  8. larrylarry

    larrylarry Well-Known Member

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    No. Singapore's economy is slowing down. A lot of foreigners buying up residential and compete with locals. It was a hit topic at election time. I'm not sure if there will be a 20 per cent drop and if there is, I'm keen to buy a property there.
     
  9. radson

    radson Well-Known Member

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    Yields on Singapore property are worse than Sydney I thought?
     
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  10. larrylarry

    larrylarry Well-Known Member

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    I might go back one day. ;)
     
  11. radson

    radson Well-Known Member

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    I have often thought about buying in Singapore, but numbers don't seem to add up. Lately I have been buying portions of the share market (ISG) due to its recent lows.
     
  12. big max

    big max Well-Known Member

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    Yields around 2%. Huge amount of supply coming on. Interests rates rising. Rents falling. Overseas buyers defaults going up. Not a pretty picture right now for Singapore.

    And they have also jacked up stamp duties for foreign buyers.
     
  13. melbournian

    melbournian Well-Known Member

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    If not mistaken u need to be a pr and married to be purchase hDB flats. Singapore is a small island similar to Hong Kong.
     
  14. big max

    big max Well-Known Member

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    Correct.
     
  15. cheekykoon

    cheekykoon Well-Known Member

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    Hmm... Be careful for Singapore market.
     
  16. larrylarry

    larrylarry Well-Known Member

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    There are other restrictions as well when it comes to renting out brand new HDB flats. The government tries to regulate the property market but sky-rocketing prices continue.
     
  17. Santaslayer

    Santaslayer Well-Known Member

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    Culturally, Asians as a generalisation prefer new housing over established property. They also don't mind living in apartments and they can be smaller in size as well.
     
  18. EN710

    EN710 Well-Known Member

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    Not sure about Singapore, but seeing the culture in my home country yes. Apartments are not regarded as things you buy because you can't afford a house (well, some in dodgier areas are). They are regarded as luxury living, everything taken care of, plus all the amenities. The more prestige, the better (to live in) o_O
     
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  19. truong

    truong Well-Known Member

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    In SEA high density apartments have only started to be built in the last few decades to house the masses. The older ones (up to the 80s, even the 90s) were of poor design and quality, earning them a rather bad reputation. Mostly occupied now by older, poorer people.

    As their societies quickly got wealthier the upwardly mobile have a clear preference for new, flashy housing with a hint of luxury thrown in, not only because it’s clean and comfortable but also because of their dislike of second hand stuff, plus the importance of keeping appearances.

    These are the same reasons why Asians in Australia like to buy new. For example you’ll find no love for grand old houses that require restoration and TLC. To renovate an old apartment will not bring you the kind of value you’d expect in Australia.

    As for Singapore, your friends are probably the ones who bought before 2013. They’re so keen because apartments with the highest amenities saw a huge boom in just a few years. However since the peak in 2013 prices have kept going down. Right now people believe prices will tumble another 10% this year, but who knows? If it keeps dropping there will come a time when buying may be good again.

    I’ve heard that several developers will have to discount heavily when their 5 year allowance is up. However dealing in an unfamiliar environment has the habit of bringing up nasty surprises.
     
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  20. melbournian

    melbournian Well-Known Member

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    in Asia like singapore, hong kong, malaysia, indonesia, OTP apartments and places actually come up higher after they are finished. There are lot of differences compared to Asia, it is not very common for the average person to do developments like sub divisions or dual occupancies unless one is associated with a large firm hence everyone preferes to buy new or minor renos. In melbourne, there is an associated factor with being near to the market like south melbourne market prices are 10-20% more than other places. however to be near a dry or wet market in Asia is to be frown upon as only maids or cleaners would live near those areas as they mainly do all the buying etc. Well that's their perception i suppose. Personally i know many people who have IPs in sinagpore who basically refinance and come to purcahse here at .99% o-1.99%. hence making a nice margin in rental returns here. for me, if i were to get something i would do a dev in Bali (easier to rent out and also lifestyle purposes).