Asia, being a land of contrasts, can be a very protean market to navigate. It is not so much as finding the right timing as having the willingness to play the long game. Many of Asia’s property gains are not for the shortsighted.
Lee Cashell should know. The investor and CEO of Asia Pacific Investment Partners visited Shenzhen in the early 1990s, not prepared for the massive changes that would sweep the mainland Chinese city’s real estate market over the next decades.
“I didn’t have enough cash at that time to invest in real estate, which is quite frustrating because if you look at Shenzhen over the last 23 years, it’s been a fantastic market,” Cashell said.
Frontera asked Cashell on the best places in the world to buy property right now, and lo and behold, four out of the five he listed are in Asia.
Mongolia
Foreigners can own property in Mongolia, and it is with this knowledge that Cashell struck his fortune in the country. In 2001, he established APIP in Ulaanbaatar; next month, it will launch an IPO on the London stock exchange.
“The thing that struck me from a business point of view was that property was actually trading below its replacement value,” Cashell recounted.
“It was probably the least expensive real estate on a per square meter basis of any country that I’d ever been to. That’s really what enticed me.”
Although the country is suffering from a fall in commodity prices, there is still plenty of excitement to go around in a country known for humongous mineral deposits.
“We have resurging prices for coal, and the gold price is quite strong, and Mongolia is producing an enormous amount of these two commodities at the moment,” he said.
“All the fundamentals are in place, which is vital,” Stuart Evans of Mongolian Properties told Property Report last year. “Yields have been extremely high over the last ten years. Some developments are actually offering guaranteed yields of 12 percent over two years, which is hugely favourable.”
Myanmar
Cashell’s company is currently eyeing Yangon for its next property prospects. “We’re very excited about Myanmar,” he said.
“There’s an aspirational growing middle class, GDP is expanding at a reasonable clip, and Aung San Suu Kyi’s government is serious about reform.
These are just the kind of changes we love to see: increasing foreign direct investment, laws that are being standardized to international best practices, and basically a consumer class that’s growing.”
Shenzhen
Shenzhen is “the strongest real estate market in China today,” Cashell said. “They say Beijing is for Beijingers, Shanghai is for Shanghainese, and Shenzhen is for everybody else, and it seems to be the attitude that many people are taking from around the country.
When I pack my bags and head to the US East Coast, people are heading to Shenzhen. It’s really pushing up property prices and the growth of that city.”
Shenzhen’s standing as a tech hub with plenty of opportunities shows in its unemployment rate — one of the lowest in the mainland China. There’s a palpable boom in the air, even though China on the whole is on a moderating GDP growth trajectory.
“There are opportunities for every kind of property buyer, including the really big real estate bond investors,” said Cashell.
“A lot of the listed Chinese companies started defaulting on bonds or ran into difficulty making their payments, but things are slowly turning around and you’re able to differentiate now between which ones that are going to be the survivors and those who might not make it.”
Sri Lanka
“Sri Lanka is growing at a fast clip and the government is, again, very reform-minded and very open to foreign direct investment,” Cashell said. “All of this is largely related to the geopolitical position of Sri Lanka and China’s national interest.”
And one where the jury is still out…
Iskandar Malaysia
This one is not on Cashell’s list, but we wanted to note it here due to the hype that surrounds it. Of the five economic growth corridors in Malaysia, this is the one that holds the most promise because of its irresistible proximity to Singapore.
In fact, Malaysia and Singapore will be closer than ever before with the completion of the cross-border rail service linking Johor’s Rapid Transit System (RTS) and Singapore’s MRT system by 2019.
Apart from the expected Singaporean investments, the growth corridor is seeing its biggest investors trickling from China, US, Spain and Japan.
Despite being great on paper, some experts have reservations about Iskandar, particularly geared towards enthusiastic developers building arguably beyond the growth corridor’s potential. Plans of a USD100 billion ‘Forest City’ in the region have been deemed “scary,” insofar as the developments might not find enough buyers to match the copious offerings.
Whether the developers have got it right or wrong, only time will tell.
This story was originally published on www.property-report.com on 29 November 2016.
