Asia property draws foreign cash
Asian property markets, once the domain of domestic investors alone, are feeling the influence of greater capital flows from overseas, Fleming Group says in an emerging market report.
'Similar to equity markets, which are often heavily influenced by the weight of money, Asian property markets are increasingly subject to external capital flows,' the report said.
Fleming analysts noted that more players were diversifying out of their home markets in search of better returns or lower risks elsewhere in the region.
Hong Kong Resort's successful joint bid for a prime commercial site in Tokyo was one such example.
In a separate trend, money was going into regional real estate from United States investors, who had favoured Europe until recently, the report said.
'While these flows of funds do not dictate the direction of the local property markets, they have been influential in stimulating interest when property markets have been near inflection points.' Regional property investment last year focused on Hong Kong, where prices were attractive after a nearly two-year, 35-45 per cent correction, it said.
Hong Kong has moved out of the bottom of its trough since then, but is far from topping, especially in the office market.
'While property prices in Hong Kong are no longer the bargain they once were, we still believe the territory will benefit from capital flows as cyclically it is still more attractive than previously favoured markets.' Former favourites - Singapore and Manila - would attract less capital, the report said.
'As for bombed out markets, Tokyo, Bangkok and Shanghai are attracting interest.' US investors were buying land in Tokyo to build discount retailing centres, although the commercial market would weaken further this year, it said.
International investors would be buying in Bangkok if domestic owners cut asking prices. The gap between bid and offer prices was huge and the market was relatively inactive.