Tokyo has been ranked as the top property investment city in the Asia-Pacific, according to a survey by Washington-based Urban Land Institute and PricewaterhouseCoopers.
But while investors see plenty of opportunities in the regional property sector, financing may prove to be a key challenge in the coming year.
Together with Tokyo, Singapore, Hong Kong, Bangalore and Shanghai round up the list for the top five property investment cities in the Asia-Pacific.
And they have been seeing growing interest from overseas investors in recent years.
But market watchers said that it may not be that easy for everyone interested to get into the market.
Stephen Blank, senior fellow, Finance, Urban Land Institute, 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.”
Speaking at an Asia Pacific Real Estate conference – organised by PricewaterhouseCoopers – in Singapore on Friday, market watchers said re-financing may be the catalyst that will bring the global financial crisis home to regional real estate markets in 2009.
According to the survey by Urban Land Institute and PricewaterhouseCoopers, Asian banks have become increasingly selective in their lending, despite having sufficient liquidity.
Lending rates are seen rising by at least one percentage point.
And banks are also expected to be willing to fund only up to 65 per cent of projects, down from previous highs of 80-90 per cent.
According to the survey, Singapore ranks among the top 5 cities in Asia for property investment opportunities.
But market watchers said Singapore’s property market faces risks of slower growth and falling demand.
David Sandison, tax partner, PricewaterhouseCoopers, said: “What we are seeing now is a pipeline of supply that is likely to come on towards the end of next year, and dwindling demand. So, the real crossroads are going to be met towards the end of 2009 when that supply comes on and the demand may well not be there.”
According to some estimates, Asian property sales have already fallen 68 per cent year-on-year in the third quarter.
Source : Channel NewsAsia – 5 Dec 2008