Top of the Heap
A new investment survey acts as a round-up and forecast
| Text : Elizabeth Kerr | Photo : www.thinkstockphotos.com |
It’s the time of year for The Lists: “Best Films of the Year,” “Worst Television Shows of the Year,” “Political Highlights of the Year,” and the always amusing Literary Review‘s annual Bad Sex in Fiction award. You’ll see best/worst-of lists on every website and in every magazine you frequently read. Property and investment are no different.
According to the annual Emerging Trends in Real Estate Asia-Pacific report released in early December and co-authored by the non-profit research group Urban Land Institute and global accounting behemoth Pricewaterhouse Coopers, 2011’s ideal spots for investment in Asia are Singapore and Shanghai. The least ideal? Osaka and Manila.
Singapore earned top marks because of the city-state’s strong financial sector, technology industries and overall impressive numbers regarding economic growth. Positions two through five were occupied by Shanghai (down from top spot last year), Mumbai, Hong Kong and New Delhi. It may seem odd that Hong Kong ranks so high when Shanghai’s drop in rank is based largely on spiking property prices that are negatively influencing investor interest. The survey was conducted and the results compiled just before the Hong Kong government’s latest round of residential market cooling measures. ULI senior fellow Stephen Blank addressed that idea with Reuters at the report’s launch. “It’s a concern and certainly affects residential developers, but I don’t think it will change the rankings. Residential doesn’t drive the market.”
The list, or survey, was put together based on answers provided by upwards of 300 property professionals across the region.
But the bottom of the list is curious: Bangkok, Auckland, Osaka and Manila all sit at the tail end of the line. Some of the factors that are influencing those cities’ poor standings are an oversupply of commercial space and stagnant rents, even though major international property consultancies have predicted glowing futures or strong markets for each at various times in 2010. “There is a great feeling of uncertainty because it is very hard to know what the potential changes in regulations are going to be. Regulations come and go. In Asia, governments turn things on and turn things off very quickly,” said Blank. That may go some way to explaining why Manila — just at the front of a development wave — is so unpopular. It may be that way now, but there’s no telling how attractive the city may be in a few years.
Investor sentiment changes just as quickly. “Honestly? Auckland may be low on the list but it’s New Zealand. It’s fundamentally very safe, stable and for lack of a better word, inoffensive. One wrong move politically from New Delhi or even Singapore and this could all go away,” said a Hong Kong-based consultancy professional that requested anonymity. “Japan is also a funny spot. It’s nearly crashed and burned in the past and bounced back. It could do so again very, very easily.”
Which is what makes year-end lists and projections so risky — and in some ways a compelling challenge. Few of us would have believed a movie about giant space Smurfs would have been an industry game-changer a few years ago but that’s just what happened. Stay tuned for more predictions and projections in the coming weeks. There’s certainly no shortage of them.
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