Asia property market s constantly evolving, and staying on top of the latest trends and developments can be a challenge. But fear not, because we've got you covered. In this blog post, we're summarizing the key property news and trends for Q1 2023 in Asia. We'll cover everything from the hottest investment destinations to the latest government policies, and give you insights that can help you make informed decisions.
Whether you're a seasoned investor or a newcomer to real estate market and investments, you'll find something of value in this post. You are interest to know property outlook for specific countries in Asia.
You can jump to the section you are interest in from our table of content here.
Table of Contents
Dubai Property Market
Dubai’s luxury real estate market has become a top contender in the global scene, with its popularity skyrocketing due to the city’s safe haven status amid geopolitical and economic uncertainties in other parts of the world.
In 2022, Dubai had 219 sales of properties worth $10 million or more, making it the world’s fourth busiest luxury property market, just behind New York, Los Angeles, and London. Furthermore, the city was ranked fifth in the world for sales worth $25 million and above, with 26 transactions.
The surge in demand for Dubai’s real estate attribute to a range of factors, including the government’s handling of the COVID-19 pandemic and the implementation of new residency visa options. According to Faisal Durrani, the head of Middle East research at property consultant Knight Frank, the growing concentration of wealth in the city has also contributed to its emergence as a leading luxury property market.
Dubai’s luxury real estate market is particularly benefiting from wealthy foreign investors seeking to shelter their assets and affluent Indians looking for second homes. In addition, the city is attracting hedge fund traders who are drawn to its tax-free status, ease of doing business and reputation as a global travel hub.
Despite its popularity among the wealthy, Dubai remains one of the world’s most “affordable” luxury home markets. In fact, it is ranked 16th in Knight Frank’s 20 global prime residential markets. This means that $1 million will secure 1,130 square feet (104.98 square meters) of residential space in prime districts such as the Palm Jumeirah, Emirates Hills, or Jumeirah Bay Island. In comparison, $1 million will only secure a quarter of that space in New York, London, or Singapore.
Central Asia Property News
Now we are going through the big countries in Asia property news. We are going to start with China and move east and then towards Southeast Asia.
However if you are looking for more property news, you can check it out here, of world-wide property news.
China Real Estate Outlook
China's Vice Premier, Liu He, has described the real estate sector as a "pillar" of the country's economy, indicating that new measures are being considered to improve the financial condition of the industry and boost confidence. Liu also dismissed concerns that weak housing demand may lead to a long-term slump, stating that China is still on course for "relatively quick urbanization."
Recent efforts by the Chinese government have focused on easing developers' access to financing through bond and equity issuance, as well as bank lending. This shift in tone follows years of downplaying the importance of the real estate sector to address widening inequality linked to skyrocketing home prices.
The government's new support measures have triggered a rally in developer stocks and bonds, with a Bloomberg Intelligence gauge of builder shares rising by as much as 3.6% on Friday. Chinese junk bonds, primarily sold by property developers, were largely unchanged, according to traders.
Chinese Government Policies for Property Market
China's real estate market is expected to receive a boost in 2023 as the government aims to revive homebuyer demand and ease financing for developers. Local governments have also started to move away from rules that restrict land sales, indicating a positive trend for the industry. The government's focus for the year will be on economic growth after the real estate slump and Covid restrictions led to a slowdown in output this year. In line with this, authorities may consider softening their stance on property policies at the upcoming annual Central Economic Work Conference. These developments are expected to create a more favorable environment for real estate investment in China in the coming year.
Shift in Rhetoric
Recent reports suggest that high-ranking officials in China are starting to alter their language regarding the real estate sector's economic significance. In the past, the real estate market was commonly considered a "pillar" of the economy; however, President Xi Jinping's recent comments indicate that "housing is meant for living, not for speculation." Despite this shift in tone, the central bank's Governor, Yi Gang, has emphasized that the property industry still plays a "significant" role in the country's economy. This view was corroborated by Liu He, who dismissed concerns about sluggish housing demand and reasserted China's dedication to "swift urbanization." These recent statements seem to indicate that the government's stance on the property market's importance in China is shifting.
East Asia Property News
Japan Property News for Luxury Use
The Topix Real Estate Index has remained relatively unchanged this year, trading at a price-to-book ratio of 0.9 times, compared to a 10-year average of 1.4. The broader Topix Index has gained about 5% over the same period, while a sub-gauge for banks has jumped nearly 10%. Badger's Japan CoreAlpha fund, valued at ¥290 billion ($2.2 billion), counts Panasonic Holdings Corp., Sumitomo Mitsui Financial Group, and Mitsubishi Estate among its biggest positions.
Badger and her team are buying into the weakness of property shares, believing that the potential hit to the sector has already been priced in. She also sees cyclical stocks, including machinery and chemicals, as attractive, following a significant valuation plunge last year amid global recession fears and Covid restrictions in China.
Emily Badger, co-manager of the MAN GLG Japan CoreAlpha Equity fund, which beat 99% of its peers in 2022, believes that concerns about the impact of policy normalization are overblown. Badger argues that the process will be gradual, and that the sector's depressed valuation already reflects such expectations.
Badger sees significant opportunity in the real estate sector, where she feels the pessimism and concerns are overdone. The actual impact on developers should be lower than what's currently priced in, she said. Badger also believes that the financial sector, especially Japanese banks, should continue to benefit, given their still-low valuations, despite outperforming the Topix since December.
Southeast Asia Property News
Singapore Property Rents Upsurge
As the rental market in Hong Kong grapples with dwindling appetite from population outflows, Singapore's prices are expected to soar on limited supply, making it a strong competitor in the market. According to analysts, Singapore rents could rise another 10-15% in 2023, while those in Hong Kong may only post a 5% increase.
With few signs of a rebound in Hong Kong's rental market, Singapore could continue to stand out in 2023, even with a slowdown in growth levels from the 30% surge last year. Home rents in Hong Kong are predominantly more expensive when compared with Singapore.
In Singapore, an acute supply crunch and an influx of wealth has pushed up rents. Locals turned to renting homes due to pandemic-related construction delays, while a months-long wait-out period imposed on owners who wish to sell their private homes and purchase public housing units exacerbated supply shortfalls. "Competitive advantage is always relative, and Singapore's status as a safe haven has been elevated by stringent Covid-19 measures in mainland China and Hong Kong" most of last year, said Victoria Garrett, Knight Frank head of residential for Asia Pacific.
Meanwhile, in Hong Kong, expatriates relocated overseas to avoid the city's pandemic restrictions, leading to a decline in housing demand. Areas popular with expats are among the locations with the steepest fall in rents in the past three years, according to online rental platform Spacious.hk. However, returning expats and mainland Chinese could lift demand for Hong Kong rental homes later this year.
Despite being more expensive than Singapore, Hong Kong could still attract foreign talent and prop up the housing market during the second half of this year if the city removes all remaining pandemic measures that have deterred businesses and visitors.
Positive from Hong Kong real estate market now comes from the country dropping the mandatory mask mandates starting March 2023.
Asia Quarter 2 Property Outlook
What we can look forward to for now is that property market in Asia is seeing some upward trends in some countries and some raising rents. What we can expect is that the market is still dealing with the affects of COVID-19. In China, the government's focus in 2023 will be on economic growth, after the real estate slump and Covid restrictions slowed output this year. As such, authorities may further soften their stance on property policies at this week's annual Central Economic Work Conference.
For Japan, investors will need to look towards the yen currency growth and the power of the yen. For Singapore, for now at least we do not need to worry about surging rents. As Orchard is one of the most expensive districts to stay in Singapore. But to rent a house in Orchard Road is still relevantly cheaper than Hong Kong. Of course, Dubai is luring in high-net-worth-individuals because of no annual property tax.
That is a wrap of quarter 1 Asia property news, what to expect in 2023 and what you as real estate investors need to know. For more real estate news check out our world-wide property insights.
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