Eye on the Asia hotspots: There seems to be no end to the regional property development boom
The allure of financial returns and accessible advantages has made Asia a continued drawing card for property investors.
In Hong Kong, the number of China-owned projects from Hong Kong-based developers is slowing drastically. Most developers are looking at Hong Kong projects but facing different challenges, such as a lack of land supply, falling retail rents and predicted residential price drops.
Luxury retailers are very quiet at the moment, with the well-documented drop in visitors from mainland China to Hong Kong, as well as much slower development in China. The food and beverage and fast fashion retailers are seeing some growth in store counts and projects in the region.
Salary increments for changing jobs are closer to 5 per cent to 10 per cent rather than the average in wider Hong Kong of 10 per cent to 15 per cent in 2015. This figure is arguably seen to compensate for the salary hikes seen in the boom years.
In Singapore, home sales rose to a two-year high in July this year, somewhat surprisingly in view of recent declining sales. Analysts remain sceptical, as this largely comes from one significant new project, High Park Residences. Overall, less than 30 per cent of transactions came from previously launched projects.
It appears that the higher end of Singapore’s property market will be slow for the foreseeable future, with the lower-end mass market seeing some movement. Developers are under increasing pressure to sell within project deadlines or face extension charges. This may be positive for the buyer, but inevitably is leading to further caution for developers’ future project pipelines.
In Malaysia, property and construction activity can be categorised into three sectors: property developers, construction and facilities management.
Property developers are experiencing a decrease in the sale of new residential developments due to some internal and external factors. In 2016, developers will be more cautious with their launches.
In construction, most Malaysian contractors have either met or surpassed the earning expectations this year. Major firms will have enough order books that should last them for the next five years. The government’s continued commitment to investing in infrastructure spending will ensure continued momentum in this sector.
Facilities management is a maturing market yet to be fully developed in Malaysia, with record-high numbers of new buildings coming to completion. This is a market-regulated industry with no legal standards set by lawmakers.
Since the government started outsourcing its facilities management, the private sectors also started following in its footsteps. Currently, thin margins and fierce competition seem to be the major industry challenges, as service providers strive to better match demand.