Asia

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Asia – low cost countries have unacceptably low yields. High yield countries have unacceptably high costs! Consider Malaysia and Thailand

Asia is not a particularly easy continent for foreigners to buy property in.  A legacy of post-colonial laws mean that many Asian countries restrict purchases by foreigners, particularly as regards buying land.

Both Hong Kong and Singapore are however completely open, anyone can buy here.  But their residential markets are very highly priced (approximately US$15,000 per sq. mt. in Hong Kong, and US$11,300 per sq. mt. for Singapore). 

Properties in both cities have poor rental yields, at 3.8% for high-end properties in Singapore, and 3.1% for Hong Kong.  Such prices cannot, in the nature of things, have very much upside potential. 

Asia does not yield a plethora of investment ideas.  Each choice has a downside, either in terms of yields, or in terms of costs and taxes.  With a slightly sinking feeling, we make the following recommendations:

• Malaysia.  Kuala Lumpur is relatively low cost, has good yields, and low transaction costs. Capital gains taxes are low but income taxes are high. The worry is high capital flight, which indicates that something is amiss in Malaysia’s economic environment.

Possibles:

• Thailand.  Apartment owners earn good yields, and there are low transaction costs.  Costs are on the high side, but not unreasonable.  Taxes are a little high.

Disadvantages of some apparently attractive locations in Asia:

• Jakarta, Indonesia has superb yields, however it has wholly unacceptable round-trip costs (26%), and quite high rental income taxes.
• Manila, Philippines.  Good yields, but high round-trip costs (18%) and high income taxes if you are a non-resident foreigner playing by the rules (25%). Petty bureaucracy irritating, too.

Gross Rental Yields

Indonesia	12.34%
Philippines	8.98%
Malaysia	8.76%
Thailand	7.99%
Japan	5.69%
Cambodia	4.33%
Singapore	3.79%
India	3.59%
China	3.55%
Hong Kong	3.12%
Taiwan	2.68%