Tokyo takes over as best bet
The
Japanese city of Tokyo has taken over from China's Shanghai
as the best Asian city in which to buy property, according to a new report by
the Urban Land Institute and PricewaterhouseCoopers...
Shanghai has traditionally been the one to beat. Named as the best Asian city in which to buy property last year, Shanghai has now been knocked off the top spot by Japan's capital, Tokyo.
Tokyo, which ranked third last year, is now seen to have the best prospects and lowest risk among the 20 locations covered by the Emerging Trends survey.
Singapore nabbed second place and Hong Kong took bronze, according to the Urban Land Institute, (ULI) a Washington-based research firm, and New York-based accounting firm PricewaterhouseCoopers.
The report surveyed executives who commented that, whilst Tokyo was definitely a weaker market that last year; it was clearly stronger than other global financial centres.
The survey was based on interviews with executives at 60 property developers and investment companies. Property developers surveyed include Mitsui Fudosan Co., Japan's largest developer, and Hongkong Land Holdings Ltd.
Among executives surveyed, 40 per cent recommended ‘hold' for properties in Tokyo, 32 per cent suggested ‘buy' and the rest said ‘sell' for real estate in the city.
PricewaterhouseCoopers' Partner Raymond Kahn said in a statement that ‘foreign investors remain interested in Tokyo even under the current weak property market conditions.'
Former number one Shanghai dropped to fifth place in the survey because its risk rating had increased dramatically, the report showed. Out of the 20 locations covered in the survey of global investors, property developers and brokers, Shanghai's overall risk was ranked 11th.
Property values are tumbling around the globe but in Asia the markets with the strongest economies and highest levels of liquidity will be most attractive to investors in the coming 12 months.
Ho Chi Minh City was ranked the best market for office properties, followed by Tokyo, Mumbai, Shanghai and Bangalore.
Vietnam's former capital city was also rated on top for retail and apartment residential property, the study revealed.
Money, money, money
But, whilst investors may see plenty of opportunities in the regional property sector, financing may prove to be a key challenge in the coming year.
Stephen Blank, Senior Fellow of Finance at the ULI, said, "Borrowers are going to find themselves, in some instances, with loans that are so-called 'upside down' financially.
"They can't be re-financed because the value of the properties declined below the collateral necessary to support the loan."
They survey also found that Asian banks have become increasingly selective in their lending, despite having sufficient liquidity. Lending rates are predicted to rise by at least one percentage point and banks are also expected to be willing to fund only up to 65 per cent of projects, a decrease from previous highs of between 80 and 90 per cent.
Picture by beggs