ECONOMIC SPOTLIGHT - ASIAN PROPERTY MARKET
Property looks set to continue to
provide good returns on investment in most major cities in Asia
and Australia this year.
    A Reuter poll of property analysts, bankers and economists
around the region shows better returns are often more likely to
come from buying and selling real estate than from rental
income.
    In central Tokyo, property analysts project commercial land
prices will rise this year by 10 to 20 pct after last year's
53.8 pct jump.
    The main draw for local and foreign investors in Japan is
Tokyo, where the top price paid for a central commercial
property last year was 169,000 dlrs a square meter. A building
in land-poor Singapore recently sold for 3,300 dlrs a meter.
    But the analysts said Tokyo rents could level off as supply
increases slightly and the strong yen puts prices out of reach
of foreign investors.
    Japanese investors, spurred by the yen's rise, are spending
record sums on property abroad, partly elsewhere in Asia, but
in particular in the U.S., Where Japanese investment could
double this year to 10 billion dlrs, the analysts said.
    The analysts forecast that Hong Kong property prices will
rise steadily over the next few years, although a surge in
construction will limit increases in some areas.
    Property sales have become increasingly popular because in
some sectors of the market real estate prices, as in several
cities in the region, have already outpaced rent yields.
    "We still see prices creeping up steadily and I don't see
why the trend should not continue over the next few months,"
said Gareth Williams, a partner of land agent Vigers Hong Kong.
But he warned investors to bear in mind the political risk
linked to the return of the colony to China in 1997.
    In several other countries, analysts predicted at least
some rise in property values, which in one or two cases, such
as Thailand, could help spark a construction boom.
    Bankers and economists in Bangkok said they expect at least
seven pct growth this year in private sector construction as a
result of government assistance, low mortgage rates and a
generally bullish economic outlook.
    Increased confidence in the economy has also improved the
outlook for property in Manila after a three-year slump, one
Philippine developer said.
    Taiwan's property market is also set to turn around after
five years in the doldrums, according to property developers in
Taipei. They, like counterparts in many of the region's
capitals, cited low interest rates as a major factor.
    One leading broker said the property market had become an
attractive investment in Taiwan, noting property development
yields of up to 15 pct.
    Jakarta too has plenty of new office towers. Construction
has helped cut rents to half the levels of the early 1980s,
though foreigners usually have to rent because of limits on
property ownership, as in many parts of Asia.
    In contrast, Australia's easing of rules on foreign
investment in property, combined with financial deregulation
and a weaker dollar, has helped spark overseas interest in the
market, analysts said. But this has not always meant sales.
    "What we have seen is an increase in inquiries, particularly
from Japan, but this has yet to show itself in many new deals
being done," said Allan Farrar, executive director (real estate)
of Elders IXL Ltd's pastoral group.
    Yields on prime Sydney office buildings average 6.5 pct,
and one analyst forecast a 20 pct jump in rents this year after
15 pct rises in each of the past two years.
REUTER...
