Five years after Asia's financial crisis sent property values tumbling from Singapore to Seoul, real estate is on the rise -- with a big assist from some of the region's central banks.
In Thailand, low interest rates mean demand will more than double in four years to 80,000 units according to Anant Asavabhokhin, chairman of Land & Houses Pcl, the nation's biggest homebuilder. Singapore home sales surged to an eight-year high last year and buyers are still queuing in China, the world's fastest-growing market.
The result: Hong Kong billionaire Li Ka-shing's Cheung Kong (Holdings) Ltd, Singapore's CapitaLand Ltd and other Asian developers -- which made up eight of the 10 worst-performing global property stocks tracked by a Morgan Stanley Capital International index last year -- may rise, investors said.
"If you see the region turning around, which a lot of people predict, that could bring a renewed period of growth across the board which will help real estate stocks," said Graeme Torre, head of Asia property at Henderson Global Investors Singapore Ltd, which manages S$3 billion in Asian investments.
Benchmark rates are at record lows in Singapore and Thailand, and at their lowest in 15 years in Hong Kong, as central banks forgo fighting inflation in favor of policies to bolster lending and growth. The Asian Development Bank last month said it expects the region -- excluding Japan, Australia and New Zealand -- to post 5.6 percent economic growth, matching its gain last year.
Investors point to Thailand, the first country hit by the region's 1997 financial crisis, as this year's hottest Asian property market. Mortgage rates as low as a record 3.5 percent and economic expansion boosted home sales, pushing the index of Thai property stocks up 72 percent last year.
"We still like the property companies even with some already at very high levels," said Supakanya Visetbhakdi, who helps manage US$1.4 billion as equity investment head at Ayudhya JF Asset Management Ltd. ``Low mortgage rates and tax incentives will keep demand strong next year.'' The economy, which last year expanded an estimated 5 percent, double 2001's pace, is expected to grow as much as 6 percent this year.
Low borrowing costs and government aid may also help Hong Kong and Singapore stocks recover some of the 30 percent they lost last year.
Hong Kong developers might gain a fifth this year, investors say, led by Sun Hung Kai and Henderson Land Development Co. The city's developers will be helped by a decision by the government, the main supplier of property, to halt land sales. Hong Kong property sales rose 24 percent by value and 5 percent by volume in December, compared with a month earlier, the city's Land Registry said.
"The government measures have resulted in improving home buyers' sentiment," said Stella Lau, who helps manage US$600 million at East Asia Asset Management Co, including Sun Hung-kai shares. "Property stocks are looking attractive."
Hong Kong's prime rate -- at 5 percent in November -- is the lowest since the late 1980s, government data showed.
In Singapore, the government's July decision to let home buyers use pension savings for down payments helped push sales to 9,500 units, property consultant CB Richard Ellis said. Singapore mortgage rates also fell to a record low 1.5 percent.
RSS