Sunny side up
Blue chip versus blue sky: which is more deserving of your property investment dollar?
With traditional safe havens for real estate and stocks on shakier ground of late, a holiday home might not seem the investment folly of yore. Hong Kong is a mere short flight from some of Southeast Asia's best seaside resorts, so justifying a beach house to be enjoyed now, and ideally grow in value, might not be such a stretch.
Rebecca Shum, executive director of investment properties at CBRE in Hong Kong, says Phuket is still one of the most popular international beachfront locations in Asia because it is but a short flight from many cities, and with convenient connections.
"Thailand is still affordable, whereas Bali [in Indonesia] has become high end," Shum says, noting that developers have gone more downmarket to maintain mass appeal.
"A few years back, the trend was mostly [to build] high-end resort properties," she says. "Now, it's more towards low-rise condominiums which are a lot cheaper and more people can afford." A Phuket property purchase today might not quite be the luxury private paradise, which costs US$4 million to US$5 million, but a more austere unit to enjoy on holiday, and rent out when you are not there, Shum says.
Risinee Sarikaputra, director of research and consultancy at Knight Frank Thailand, agrees that while Phuket continues to attract its fair share of extremely wealthy foreigners and property investors, the number of them willing to spend 100 million baht (HK$22.02 million) or more for a luxury villa has been dwindling.
Before 2008, the condominium supply in Phuket tended to include larger units of over 100 square metres, Sarikaputra says. Now, 82 per cent of the total supply is smaller than 70 square metres, representing a shift in buyers' intentions, from self-occupancy to pure investment purposes.
In addition to Phuket, the beachside markets of Hua Hin and Pattaya also remain strong, she adds.
Investment in property in Thailand's popular resort areas continues to attract interest from local and foreign buyers, Sarikaputra says.
"While such activity has slowed, each of these markets retains specific attributes that continue to drive sales and new project developments," she adds.
Bali remains a popular holiday destination, but has gone off the radar for property developers, due to high land prices and a scarcity of sites. Knight Frank's annual Wealth Report found Bali to be the leading Asian second-home market of 2015, with prices of high-end property soaring by 15 per cent year-on-year for the third-highest gain among 100 markets tracked. But 2015 "was flat", according to Matthew Georgeson, director of Elite Havens, representative sales office for Knight Frank in Bali and Lombok, and in 2016, there remain precious few new developments.
Judging by the number of inquiries his office receives, potential buyers are still keen on Bali, says Georgeson, but the stock just isn't there.
"There have been no substantial new developments in Bali for the last year," he says. "The market is soaking up previous stock." That said, top-shelf beach- and cliff-front signature properties are still selling, he adds.
Malaysia, too, has dropped out of favour with foreign buyers, due to political uncertainty undermining confidence. On top of a slowing economy, which is already impacting the property sector, restrictions on property purchases by foreigners require a minimum spend of 1 million ringgit (HK$1.93 million), while capital gains tax also imposed "has hit the industry quite hard", industry sources say.
The Philippines, on the other hand, remains affordable, and its growing economy and improving political stability is making the archipelago's beach properties more attractive to second-home buyers.
Since the government set up the Philippine Retirement Authority targeting expatriate retirees seeking a "cheap and cheerful" lifestyle destination, the biggest take-up has been from buyers coming from mainland China, Japan, South Korea and Taiwan - markets that already have well-established trade and tourism links with the country. Realtor Rainier Reyes says entry-level units in the beachfront Mactan Newtown project, Cebu, start at US$70,000, while high-end branded residences at the Sheraton Cebu Mactan Resort start at US$200,000. Overseas retirees want a property that is on the beach, and close to the airport, he says.
Alexandra Katindig-Stolle, manager at CBRE Philippines, reports seeing more resort-grade projects coming to the Philippines, particularly resort areas "which remain a broadly untapped market in the country".
"This is mainly due to the sustained growth of the Philippine economy and the continued growth of our tourism industry," she says. "Generally, we see a 20 per cent premium for resort properties in pricing."
Most resort-type inventory and upcoming developments are on Boracay Island in the province of Malay, Katindig-Stolle says. "Boracay remains as one of the Philippines' most popular islands, due to its beautiful, white beaches and easy accessibility from Manila and some countries in the region."
For example AQUA Boracay by Yoo, located along Bulabog Beach, is the first residential resort on the island, she says. Designed by Philippe Starck and John Hitchcox, it is comprised of about 48 residential units and 90 condotel units.
Oceanway Residences is a joint development between Megaworld and Global-Estate Resorts. This property belongs to the 140-hectare Boracay Newcoast Development on the island that features commercial establishments, hotels and residential condominiums.
"These mid-rise condos are modern Spanish-style and overlook the Sibuyan Sea," Katindig-Stolle says. "There is also a golf course on the other side."
Boracay Savoy Hotel is another new project within Boracay New Coast. This condotel development has 560 fully-furnished units operated and managed by Prestige Hotels and Resorts. In-house amenities include business centres, swimming pools, cafe, pool bars and a retail strip.