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Insights from our northern neighbours

If this really is to be “The Asian Century”, the growth of its population and economic impacts continuing to surprise, it seems time we started looking to that continent for trends in property that we’d best be prepared for. What’s driving markets in China, India, Singapore, Indonesia and other nations? Are there lessons from their experiences and how might property and property owners in Brisbane be affected in years to come?

Two of the Bees Nees City Realty team have just returned from the First Asia Pacific Real Estate Convention in Singapore, and here’s some of the insights gained from hearing speakers from throughout the region, most of them leaders of their respective property industries:

Demographic change is key to much of the planning by Asian governments. India will soon become the most populous nation, and of their 1.22b residents 50% are 25 years or younger. Maybe not surprisingly there are 865 million mobile phone users in India! The nation already has a middle class numbering 250 million people.

On the other hand Japan’s population is shrinking and aging, with 30% now 65 years or older. Their property prices peaked in 1990 and have trended downwards ever since. Just when they showed signs of stablising in 2011 they had the earthquake and tsunami… (I’ll never complain about our Brisbane market again)

Hong Kong home prices have doubled since 2009. Less than 40% of their home owners have any mortgage left to repay as, like many Asian nations, they’re great savers. So what will they all do with that soaring equity?!

Government intervention in housing markets is common across Asian nations. Prices have soared so quickly in places like Taiwan, Singapore and Hong Kong there’s now new taxes and duties to discourage property speculation. Despite this in many market buyers are still busy, with home loans on offer for around 1.5%.

The Singapore government now has laws allowing/encouraging apartment buildings to be torn down and replaced by larger, new towers that house more residents in the same land area. If 80% of your neighbours want to sell up you must sell too: civil liberties are not as important as recycling of housing stocks. Mind you, some owners do well out of these changeovers. One recent project saw S$800,000 apartments bought up for S$2.1m each – all 618 of them! A new development on the site will house 1,715 apartments. Believe it or not we’ve already seen some moves like this in Brisbane’s CBD, and if your apartment’s in a prime spot on a large block, what might the future hold?

Leasehold property is still the norm in many countries, with 99 years standard in Singapore. They envy our freehold tenure but seem unfazed by the short timeframes of their leases. So we asked a local agent, do buyers care if the apartment’s 30 years old and the lease is down to just 70 years or less? “No way” she says, they’re waiting for a developer to buy them out! Very few residential properties ever reach 40-50 years.

China’s real estate industry is very much in its infancy, with government control and regulation very common. Agents need to be licensed and have compulsory annual training – something we’ve been pushing for in Queensland! Interestingly the major agency franchise groups are getting a strong foothold.

We’ll leave it to you to ‘read the tea leaves’ from these notes. What seems obvious to us is the mind-blowing growth in population and wealth, the ingrained love of property and the forward-planning, long-term thinking that’s second nature to our northern cousins. We might not know what the next 50 years holds for Brisbane property but it’s a fair bet our ties to Asia will grow closer.

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