Real Estate Market in Asia

Real estate markets in Asia are set for another busy year, as foreign investors are still attracted by the region, according to a survey of the credit ratings agency Standard & Poor’s Rating Services. According to the agency, the growing urbanization and the development of real estate investment trusts, or REITS, will drive Asia’s long-term property market.
The real estate tiger market of Asia has sprung up and received more coverage than most markets and with worthy reasons. Global real estate markets are on an upswing and developers are confident of the prospects in Asia. Along with the impressive barrage of infrastructure that has emerged on the landscape of not a few Asian countries, matured real estate markets are being primed for potential investments. South East Asia itself is predicted to experience an investment growth of 2.3% to reach 10.7% in 2006 and unless investors are ready, they will be bowled over by an infrastructure boom in Asia.
The tangibility of real estates is but one characteristic that has made it so appealing to many. Over the years, real estate has churned out returns through rental income, appreciated in value, been traded as securities and converted into real estate investment trusts (REITs). This ubiquitous instrument is not merely a buzzword in most investor's lips but a promising investment target, highlighting the characteristics that few investment tool can boast: transparency, promising dividend rate, liquidity, relatively lower in risk, attractive tax allowances and much more.
Along with its promising future, REITs are not exempted from challenges, among them: aligning and meeting stakeholders' interests and demands, engaging in dual listings and abiding with the regulations of different countries, evaluating the ramifications of cross border REITs and sustaining the growth of REITs in an approaching mature market.
John Bailey, the managing director of Standard & Poor’s Rating Services in Hong Kong, says that still in some countries the sector has structural deficiencies, and there are really two separate real estate markets in Asia. He says mature real estate markets such as Singapore, Hong Kong and Japan have relatively transparent legal and regulatory environments.
"But there are also the less developed markets such as China, India, Indonesia, which are less transparent and more susceptible to irregularities," Bailey said. "Growth patterns can be temporarily derailed by political risks. These sorts of events will override economic fundamentals occasionally and need to be closely monitored."