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Published on December 25, 2007

Property prices in much of Asia are still undervalued compared with precrisis levels despite strong increases this year, says a Global Property Guide survey.

The online property research house said China was unfortunately not open to investment and that non-resident foreign buyers of dwellings were no longer welcome. Developers remain welcome.

While property prices in Beijing will probably peak next year after the Olympics, Shanghai continues to prepare for the World Expo in 2010, the survey said.

With yields at 8 per cent, Shanghai prices have nowhere to go but up unless the government intensifies intervention.

Cambodia could be a proxy for China. Strongly tied to the Chinese economy, Cambodia is open, has high yields, relatively low transaction costs and low taxes, although investors must be prepared only for indirect acquisitions of land, due to constitutional limitations on foreign purchases.

The report said the resolution of Thailand's political crisis next year could open opportunities after two dismal years. Gross rental yields are good at 7-8 per cent, income tax is relatively high but acceptable compared with the Philippines and the market is pro-landlord. Under better management, Thailand could do very well.

Indonesia is attractive but has problems as an investment destination. There are high yields in Jakarta but very high transaction costs and high rental-income taxes.

The Philippines also has high yields but similar discouragingly high transaction costs and high rental-income taxes, said the analysis.

Japan's housing market is recovering strongly. While Tokyo's gross rental yields are unattractive at about 4.7 per cent, price momentum is positive, the law is strongly pro-landlord and there are low transaction costs and low rental income taxes. Recently announced tighter regulations of new dwellings could lead to faster property-price appreciation.

In Singapore, the company believes gross rental yields are now too low, at 2-3 per cent. Nevertheless, Singapore is attracting and admitting more foreign workers, which is positive for prices.

The Global Property Guide believes Hong Kong's yields are somewhat higher, at 3-5 per cent, and the US-dollar peg would mean Hong Kong would follow lower US interest rates, which should boost the housing market.

Property-price changes in Indonesia and Malaysia remain unimpressive. Although Indonesia's House-Price Index was up 5.2 per cent in nominal terms at the end of the third quarter, the index actually dipped 1.2 per cent when adjusted for inflation.

Malaysia's House-Price Index rose 3.2 per cent, or 1.7 per cent in real terms, year on year in the second quarter year, the report said.

Property prices in Australia continue to recover from that country's housing-market slowdown in 2004-05. The House-Price Index for all eight capital cities rose 10.6 per cent to this past September from the year before, slightly higher than the 10.1-per-cent annual increase in September 2006.

The report said signs that New Zealand's house-price boom was coming to an end appeared in the second half of this year. Although the national median house price rose 6.6 per cent year on year, it was the lowest annual house-price increase since February 2003, it said.

The Reserve Bank of New Zealand raised its benchmark interest rate four times between March and July, to 8.25 per cent. The market downturn is expected to continue next year and into 2009.

The biggest concern is oversupply. Dubai is swamped with new properties to be delivered in 2008-09. A slump in demand from international buyers due to a global economic slowdown could exacerbate the problem. The speculative nature of its housing market makes Dubai highly susceptible, the survey warned.

The Nation