Manila provides a good start
Individual investors are turning away from traditionally popular cities, finding more attractive entry prices in emerging markets
Hong Kong homeowner Michael Kwan cashed in on the doubling of the value of his flat this month and wondered whether to park some of the proceeds in his first overseas property investment while he waited for the right moment to re-enter the local housing market.
Having looked at destinations popular among Hong Kong investors such as New York, London and Sydney, he decided the entry price levels in these markets was too high since he wanted to invest no more than 20 per cent of his money outside Hong Kong.
Finally he found a promising opportunity that fitted his budget - a 26-square-metre flat in a new luxury project a few blocks from the Makati business district of the Philippine capital, Manila. The flat, in Knightbridge Residences built by Century Properties, had a parking space and was on offer for HK$830,000, or HK$2,550 per sq ft of saleable area. The parking space about HK$114,000.
"I was attracted by the small lump-sum price and the prestigious location. In Hong Kong, it is impossible to buy such a home at that price. So I'm seriously thinking of buying one," he said.
Due to be completed by the end of the year, the development of more than 50 storeys is adjacent to another luxury project, Trump Tower, being jointly developed by American property mogul Donald Trump and local developer Century Properties.
Rick Santos, chief executive of CB Richard Ellis' Philippines office, said 20 to 30 per cent of Makati's luxury flats were bought by foreign buyers.
However, foreign buying interest could be dampened by growing speculation about a tightening of liquidity in the near future after the US Federal Reserve last week signalled its quantitative easing programme might be tapered off later this year.
"In the short term this may weaken demand from overseas investors. But in general the Metro Manila property market will continue to remain robust as it is driven mainly by domestic end-users," Santos said.
Property investment firm IP Global is marketing new projects to Hongkongers in the Australian state of Queensland and the Malaysian capital, Kuala Lumpur.
"Given low acquisition costs compared to Hong Kong, we are confident these cities will have greater upside potential due to their strong economic growth," Tim Murphy, founder and chief executive of IP Global, said.
In Mackay, Queensland, two-bedroom flats of 764 sq ft to 840 sq ft in the Pacific Sands development, overlooking the sea and five minutes drive from the CBD, are for sale at A$430,000 (HK$3.07 million), with 8 per cent net rental guaranteed for three years.
In Kuala Lumpur, a 2,000 sq ft flat at The Richmond, a 15-minute drive from the CBD, is for sale for less than US$500,000. Property prices in the city have grown by about 5 per cent a year over the past 10 years, Murphy said.