4 Southeast Asian Cities for Real Estate Investment

Real Estate Investing has been proven to be one of the most lucrative investment options out of many others. If equipped with the right knowledge and tools, real estate can be a low-risk investment with modest to high passive income.

Regardless, it must be kept in mind that the rate and speed of ROI rely on several unique factors such as property type, demand, sustainability, and most importantly, the location. To cite an example, high rise condominiums situated in metro cities have higher demand than the ones in the suburbs. Same can be said with the price difference of units in first world countries versus less developed nations. The former is more expensive than the other but can yield greater returns.

Real Estate Market in Southeast Asia

In Southeast Asia, developing countries have been recently gaining attention from foreign investors like the US, Japan, and China. Meanwhile, more developed countries like Singapore and Malaysia are ever successful in retaining their upward trend in the real estate market.

The constant growth of the real estate market in Southeast Asia begs the question, “which is the best country and city to invest in?”.

That’s why we created our own list, in no particular order, of the best cities to invest in real estate, based on recent statistics and other relevant data.

Bangkok, Thailand
High rise and the BTS Skytrain in Bangkok, Thailand

Bangkok’s economy has been steadily growing for the last decade or so. More and more infrastructures are being built every year, bringing in even more foreign investments. The capital city has long attracted expats due to its modernity and affordability. Tall and gleaming buildings, luxury hotels, and other scenic infrastructures are enough to enchant anyone who visits Bangkok. These are just few of the many reasons as to why foreigners are so eager to invest in the city.

While the price of condo units vary on the type, most are still undeniably cheaper than what can be found in other modern cities like Tokyo, New York, and London. An upper-mid-range condo unit can cost only about $2700 — $3700 / m². That’s significantly cheaper than what you can get in the states, even compared to a basic unit.

And if that’s not enough reason, Thailand was tagged as the 8th largest economy in Asia ($514.700 Billion GDP) in 2018 with Bangkok contributing 30% of the pie.

Phnom Penh, Cambodia
Aerial shot of Cambodia’s capital city, Phnom Penh

While the country isn’t on the list of the largest economies in Asia, Cambodia is still one of the fastest growing economies among the other developing countries. They’ve been steadily growing since 2010, exceeding 6% growth rate year on year. Other Asian countries are contributing to the growth of their economy by building private infrastructures like hotels, factories, and communication towers. The Japanese government is also financing the development of railways and roads which will also help boost the country’s economic growth. Institutions like the Asian Development Bank, World Bank, and IMF are speculating a growth of around 7% until at least 2020.

The new skyscraper, The Bridge, being constructed in Phnom Penh, Cambodia. Source: https://www.skyscrapercity.com/showthread.php?t=1672920&page=10

The real estate market in Cambodia is tied up to its consistently growing economy. Right now, entry-level condominiums in metro cities are valued at only $1500 per / m² while units in the high-end category cost about $3200 on average.

Recent studies also reveal that unlike other developed countries in Asia, Cambodia has both high rental yields and strong appreciation prospects. In fact, During Q3 2016, prime condominium prices in Phnom Penh rose by 7.44% from just a year earlier.

There is no denying that Cambodia is in the midst of a construction boom. More foreign companies are coming in, reflecting property market growth, and increased investor confidence.

Parañaque City, Philippines
A landscape of Parañaque City, Metro Manila

Popular business districts like Makati, Taguig, and Pasig might be the top choices if money isn’t an issue. Renowned corporations, fast-growing startups, and industry leaders can be easily spotted in these modern cities making them more attractive to home buyers and investors.

While many people think investing in the previously mentioned cities will give them the highest yield, a study by Zipmatch proves otherwise. Their data suggests that cities south of Metro Manila give a rate not lower than 7.3%. Cities such as Parañaque, Manila, Las Piñas, and Pasay overshadow the more popular districts due to the development of new tourist attractions and other infrastructures.

Metro Manila cities with the best rental yield according to Zipmatch

Parañaque city is at the top of the list with 7.98% yield. It is also the second most affordable city to buy property with an average price of $67,000 for a 2 bedroom unit.

This only shows that factors for choosing a city to invest are not always the same per country. In countries with a big metro city like the Philippines, affordability and location are two of the biggest factors.

Jakarta, Indonesia
Busy nightlife in the business district of Jakarta, Indonesia

Last on the list is the from world’s largest island country. Jakarta, Indonesia.

Indonesia has the largest economy in Southeast Asia. It is the sixteenth largest economy in the world by nominal GDP and is the seventh largest in terms of GDP (PPP). Jakarta, Indonesia’s capital city, is highly urbanized with a population of over 10 million, the highest in the country. The real estate market in Jakarta is also one of the hottest markets in Asia. The price of high-end apartments in the capital range from $2500 to $2900 per / m² with a rental yield of 7.4% to 8.5%.

The only disadvantage of buying a property in Jakarta is the complex and strict regulations for foreign buyers. This is coupled with expensive processing and transaction costs.

Nevertheless, Jakarta is one of the best cities in Asia for real estate investment based on recent statistics.

Conclusion:

If you are a foreigner looking to live or to simply buy a property for investment purposes, countries in Southeast Asia might be a good place to consider. Since it is home to many developing countries and emerging markets, prices of properties can be guaranteed cheaper than more developed and popular countries.

But keep in my mind that there are existing regulations for foreign property buyers in each country. One is highly advised to study them thoroughly first before engaging in any transaction to avoid any inconvenience and future loss.


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