Page 1

www.propertylifenews.com

ASIA’S NO. 1 PROPERTY & LIFESTYLE GUIDE • DISPLAY TO NOVEMBER 30TH 2013

FE ATURES

MORE

FRACTIONAL OWNERSHIP IS AN ITALIAN RENAISSANCE UNDERWAY?

PARTY TIME

HOW FIESTA MIGHT BE THE KEY TO PROPERTY INVESTMENT

LONDON CALLING DOES THE BRITISH CAPITAL STILL HAVE WHAT IT TAKES?

Culture Cuisine Luxury Resort Living 5 bedroom oceanfront villa-Nai Thon, Phuket.

P LU S

The best places to eat, drink, live, love and invest

FOLLOW THE MONEY! Singapore's favourite holiday and investment destinations


THE TEAM Managing Director/Publisher ALEXANDER KNIGHT alex@panashcomedia.com Managing Editor STEVEN MALLACH steve@panashcomedia.com Business Development Manager Europe TREVOR WATLING trevor@panashcomedia.com

MANAGING EDITOR’S NOTE In this issue readers will note that we seem to be leaning toward more content containing lifestyle orientated subject matter, balancing out our traditional smorgasbord of in-depth analysis. The reason for this is simple and speaks directly to a trend that we at Property Life have identified as driving much of the current growth in the the property market. This trend is characterised by an increased incidence of ‘lifestyle investment’. This trend is not only reflected in purchases at the luxury end of the investment scale. Investors across the board are taking a long hard look at how their investment will perform in the short ,medium and long term based on criteria which may not be reflected on a traditional balance sheet. This is not a new trend, most (if not all) property buyers will have a close look at the neighbourhood that they are buying into, along with macro-economic issues and the socio-political environment of the country where they will be spending substantial amounts of money. What does seem to be changing is added scrutiny by investors of the lifestyle amenities on offer within easy reach of their bricks and mortar nest egg, as well as the attributes of the property itself. The nature of the due diligence and the steps that these investors are willing to take in order to increase the marketing potential of their property to an ever more educated (and cost sensitive) rental market is also increasing. This trend also seems to be complimented by a focus on value added options that will make rental properties even more attractive to potential tenants. Fully furnished apartments and holiday rentals have been around ever since Ugg threw a bear pelt on the floor of his cave and added a dozen clams to the monthly bill, but what we’re seeing is slightly different. In the midst of a troubled property market investors are starting to add value to their fully furnished and rental property assets through the addition of value added extras. Entertainment solutions, I.T infrastructure (a high speed wireless network is now accepted as one of the top ten reasons why people choose a specific rental option), stocked wine chillers, high end white goods, even the provision of motor vehicles for holiday homes are now increasingly common motivators for short and long term rental. The global property market has been under pressure for the last decade. This makes rental performance even more important when squeezing income from underperforming assets. The competition for wallet space in the rental market is also extremely cutthroat. By adding value to rental property investors are hoping to stand out from the crowd. At PropertyLife we are committed to giving our readers insight into country specific, regional and global trends in the property market. Aside from our usual emphasis on property for residential use, we will now be adding a little spice to the mix with some emphasis on the added value options that may make your home or rental property outshine the competition.

Steven Mallach

Director, Key Accounts MIRIAM RAHMAN miriam@panashcomedia.com Business Development Manager ASIA PAC APRIL PORTEOUS april@panashcomedia.com Art Director ARIF VILLANUEVA ADIL production@panashcomedia.com Design Assistant PAULINE DYCOCO production@panashcomedia.com Senior Editor VITTORIO HERNANDEZ editorial@panashcomedia.com Editorial Assistant JONALYN FORTUNO editorial@panashcomedia.com Sales Executive CHRISTINA MENG AVIESSA KHOO advertising@panashcomedia.com UK Sales MARK MARTIN mark@panashcomedia.com Contributors KRITI JINDAL SCOTT O. TALBOT ALBERT FONTENOT JAMES NORMAN NAMTA GUPTA Circulation and Distribution SASHA RITZER circulation@panashcomedia.com GET YOUR FREE SUBSCRIPTION AT http://www.propertylife.asia/subscription.html or email us at subs@panashcomedia.com DOWNLOAD OUR iPad and iPhone app from the Apple App Store We really want your feedback! Please contact us: Tel: +65 6534 9390 / email: info@panashcomedia.com

For regular updates and more commentary you can Like! us at facebook.com/propertylifemagazine and follow us on Twitter @property_life and #PropertyLife PROPERTY LIFE IS PUBLISHED BY

1 Scotts Road, #20-01 Shaw Centre, Singapore 228208 Panashco Media Pte Ltd is registered in Singapore 201127591R. Copyright © Panashco Media Pte Ltd 2013. All rights reserved. Any content of Property Life may only be reproduced, in any shape or ­format, with the expressed permission of Panashco Media Pte Ltd. For reprints please consult the advertising department. While every care has been taken in the production of this publication, the publishers take no responsibility for any views expressed, errors, loss, or omissions that may occur. Currencies quoted are for information purposes only – and are accurate as we went to press. Printed at Times Printers, Singapore. MICA: 165/04/2012 • ISSN 2251-3949


Contents OCTOBER-NOVEMBER 2013

18

Culture+Cuisine

Choosing where to invest can be an affair of both the heart and mind. Property Life looks at countries that boast some of the most exciting culture and cuisine in the world and balances those with investment opportunities.

20

VIET N AM

28

T H AILAN D

34

C ARIBBEAN

38

MEXICO

This rising dragon celebrates a unique food culture and offers significant upside potential in the buy-to-let market.

Soaring tourism numbers mean opportunity for rental property investment.

Attractive investment incentives and a mature tourisim industry keep Barbados in the property picture.

44

FLORIDA

50

SPAIN

56

INDONES I A

Lifestyle choices and bargain property pricing attracting investor interest.

Sun drenched excitement for property investors in the midst of regional economic woe.

Festivals galore across the archipelago.

Emerging market real estate favourite remains a hot bet at the crossroads between North and South America.

ON THE COVER

| Oceanfront Villa

Oceanfront villa for sale Nai Thon, Phuket. This incredible property sets new standards in luxury resort living and offers the definitive private retreat. This five-bedroom villa occupies three levels, and offers stunning views and complete privacy. The ultimate in architectural style and sophistication and the epitome of understated elegance, the villa is fully furnished with Southeast Asian antiquities. © Photo courtesy Image courtesy Hunter Sotheby’s International Realty


Contents OCTOBER-NOVEMBER 2013

QUEST FOR 64 THE BALANCE Lifestyle condo living choices.

F E AT U R E S

10 LONDON CALLING

Why does the cpaital of the UK still capitivate property investors?

A 14 OUTLASTING RECESSION

Income producing investments at a time of low interest rates.

ON 16 INVESTING THE RIGHT SIDE

INVESTMENT 65 ASIAN IN AUSTRALIA Buying the farm Down Under.

68 EYE CANDY

The best cities in the world for investment based on urban beauty.

71 ORGANIC FORMS

PROPERTY 60 GLOBAL MANAGEMENT SERVICES

How to maximise ROI on overseas property rental investments.

06

News - Spotlight on China

10

News - By The Numbers

95

Malaysia Update

96

Singapore Market Update

104

Afterwords - Publisher’s Opinion

Property Life talks to Jamie Durie - award winning landscape and design guru.

OF THE TRACKS

When success or failure in property investment hinges on the smallest detail.

REGULARS

78 SURPRISINGLY HOT PROPERTY MARKETS

71

80 ON THE BEACH

Just how much of a premium are we paying for brachfront property & how much longer will it be around?

68 78

E R R A T U M In the April - May 2013 edition of Property Life a feature entitled ‘ Southeast Asia’s Billionaires’ showed an image of Lucas Chow when the correct image should have shown Robert Ng.


NEWS OC TO BER - NO VEM BER 20 13

Branded developments trend accelerating —

Forbes Tower

going up in Manila

SOURCE FT.COM

T

he trend of using buildings as soapboxes to broadcast brand value seems to be gathering pace. Earlier this year DAMAC Properties, a Middle East based property developer and Paramount Hotels & Resorts announced plans for the ‘DAMAC Towers by Paramount’. The development will comprise a 540 key Paramount Hotel & Residences and more than 1,400 units of DAMAC Maison – Paramount co-branded serviced hotel residences located in the heart of the downtown Burj Khalifa area in Dubai. In early September, the publisher of Forbes  magazine will collaborate with Century Properties Group to build the first Forbes-branded tower in Makati, a suburb of Manila, in the Philippines.   The  Forbes Media  Tower is expected to be one of many around the world designed to serve global business leaders by providing a business environment with “premium amenities,” according to a release.   “We’re very pleased to be collaborating with Century Properties for the first Forbes Media Tower as we extend our brand into the global real estate development market,” Mike Perlis, chief executive of Forbes Media, said in the release.  “The Philippines, with its rapidly growing market and strong relations with the U.S., is the perfect location to launch this effort.”  The tower will offer approximately 60,000 square metres of premium office space, available for sale or rent by the first quarter of 2014, the company said. The building will also provide meeting and event space, a fitness center and exhibition facilities.   The tower will be located in Century City, a mixed-use development created by Century Properties, the Philippinesbased real estate firm.   “This partnership fits perfectly with our distinguished portfolio of local and internationally renowned brand partners,” Jose E. B. Antonio, president and chief executive of Century Properties Group, Inc. said in the release. “It is also an honour for us that Forbes has recognised the Philippines as one of Asia’s bright spots and showed its confidence by choosing Makati, Metro Manila as the first site of its landmark business tower.”  The central business district of Makati includes premium residences, office buildings and the Century City Mall. The tower’s location will allow accredited locators to benefit from incentives from the Philippine Economic Zone Authority (PEZA), according to Century Properties.

6

USD

$5.6 B I L L I O N

Analysts at Savills Research in China estimates that China’s investment in U.S. properties has risen from USD $900 million in 2010 to USD $5.6 billion in 2012 and is on track to exceed those numbers this year.

22%

Shares in the 10 largest Hong Kong-listed Chinese property developers have gained an average 22% since late June, far outpacing the MSCI Asia ex-Japan index, an Asia-wide equity benchmark that has gained 8% during the same period.

4%

At time of going to press the Malaysian ringgit was at its lowest level against the Singaporean dollar since 1998, dropping 4% in the last three months. The currency’s downward trend has further fueled Singaporean interest in Malaysian real estate. Iskandar and Johor, with their proximity to Singapore, and rapidly increasing levels of development activity are receiving the most interest.

$114 BI L L I ON

The global volume of direct commercial real estate investment in the second quarter of 2013, according to the capital markets research unit of Jones Lang LaSalle. It is up 4% compared to Q2 of 2012 and 9% compared to Q1 of 2013. The strongest growth was felt in the Asia Pacific, Europe, Middle East and African real estate markets.

GBP

£20 BI L L I ON

That amount, equivalent to USD $29.8 billion, is the estimated amount of overseas investment spent within the United Kingdom real estate market in 2012. For 2013, the amount is expected to go up further due to the ongoing expansion of investment by current investors, new investors and a fast-growing pool of foreign capital.


NEWS O C T O B E R - N O V E M B ER 2013

S P O T L I G H T

Record Chinese land sale

A

plot of Chinese residential land sold for a record price this week, a sign that the country’s property market is heating up again as the economy recovers. The 28,168-square metre parcel of land in one of the wealthiest areas of Beijing was bought by Sunac China for Rmb2.1bn (USD $343mn). Including a commitment to build a hospital at a separate site, the total price worked out to Rmb73,000 per square metre of buildable space, the most ever paid for a piece of land in China. It is the latest in a string of recordsetting land sales in China’s biggest cities, with the country’s developers taking heart at what they see as a softening in the government’s stance towards the property market. Over the past three years, the government has unleashed wave after wave of measures to rein in runaway house prices, but China’s new leaders have desisted from any major new tightening move since entering office in March, fearful of further undermining already shaky economic growth. “Since the middle of this year, developers have been getting a lot more bullish than before. They have been more concentrated in buying land in top-tier cities because they see more value there in the long term,” said Du Jinsong, a property analyst with Credit Suisse.

O N

C H I N A

Shanghai land plot sold for record Price Vanity architecture

S

un Hung Kai Properties purchased a commercial plot during an auction in Shanghai in early September for 21.8 billion yuan (USD $3.6 billion), a record high for the city. Sun Hung Kai, Hong Kong’s biggest developer, placed the highest bid for the Xu Jia Hui Centre Project site, described by the comany as the “largest and last prime site in the city center.” Located in the Xuhui District, Shanghai’s commercial core, the project will be close to the Xu Jia Hui metro station.   “The Xu Jia Hui site is in a premium location with great development potential,” SHKP chairman and managing director Thomas Kwok said in the release. “We are very pleased to win the project...we are committed to high-quality developments and have extensive experience in producing large integrated projects in Hong Kong and on the mainland.”  The project will have a total site area of more than 1.06 million square feet and a total floor area above ground of approximately 6.28 million square feet. The developer has plans for a commercial complex with 70 percent premium offices and 30 percent for retail and hotel use.   The land acquisition is in line with the developer’s investment strategy in prime mainland cities. The group earned widespread recognition from two integrated projects, according to information released by Sun Hung Kai.   “Office and mall leasing at Shanghai IFC and Shanghai ICC have been exceptional and the Shanghai IFC mall and the iAPM mall are opening in stages with satisfactory performance in traffic and turnover,” SHKP chairman and managing director Raymond Kwok said in the release. “The project is expected to contribute to the group’s stable recurring income and further strengthen its position and brand in the mainland market.”  Land prices have been skyrocketing throughout China, despite concerns that the property market may have peaked. A residential plot sold at Beijing auction earlier this week for 2.1 billion yuan, the maximum price set by authorities, according to Reuters. Sunac China Holdings beat seven bidders for the residential plot, paying 73,000 yuan a square meter.

A

nywhere from 20 to 40 percent of the world’s tallest buildings are capped by wasted space, according to a new study by the Council on Tall Buildings and Urban Habitat. The study focused on what the CTBUH calls “vanity height,” defined as “the distance between a skyscraper’s highest occupiable floor and its architectural top.” In many of the world’s tallest skyscrapers, the space is filled by spires and architectural elements that “do not enclose usable space,” based on the Council’s standards. For example, 244 meters of the 828-meter Burj Khalifa, the world’s tallest building, is rated as unoccupiable, 29 percent of the height. Burj Al Arab, the sail-shaped hotel off the coast of Dubai, has the highest ratio of vanity space of any supertall, with 124 of its 321 meters (39 percent) devoted to non-occupiable space. The Council labels the Ukraina Hotel in Moscow as the “vainest” in the world - 42 percent of the 206-meter tower is non-occupiable. But Dubai is not alone in the vanity architecture stakes. Sixty-one percent of the world’s 71 supertall towers - with supertall defined as 300 meters or taller - would no longer be classified as supertall if the vanity height was subtracted, according to the Council’s data. China was in the running with its ambitious plan to build the world's tallest building - Sky City in Beijing in just 90 days using prefabricated components. Construction began in June, but was abruptly halted by Chinese authorities in what could signal an end to China's skyscraper boom. The CTBUH is a non-profit association for builders and designers of tall buildings. Although it has no official role, it has become the arbiter of tall building heights and maintains an extensive database on tall buildings around the world.

7


NEWS OC TO BER - NO VEM BER 20 13

Hongkong land seeks

more Singapore office plots

H

ongkong Land Holdings Ltd. (HKL), will seek more commercial plots in the island-state as tenants look to upgrade. Hongkong Land, part of a venture with Cheung Kong Holdings Ltd. (1) and Keppel Land Ltd. (KPLD), will be looking closely at land purchases in Singapore’s prime office areas when the government puts them on sale, said Executive Director Robert Garman. The venture already has experience in Singapore’s thriving business district, having built a key development, Marina Bay Financial Centre, for about S$4.5 billion (USD $3.5 billion). Global banks such as Standard Chartered Plc and Macquarie Group Ltd. up-

39 73%

5.2% 350%

117 8

graded their Singapore offices to new locations developed by Hongkong Land and its partners, while Barclays Plc and Nomura Holdings Inc. have relocated regional and global functions to Singapore, ranked the easiest place to do business for seven straight years by the World Bank. Monthly prime office rents  rose 4.2 percent in the June quarter from the previous three months, according to Cushman & Wakefield Inc. “We are confident of the Singapore office market,” Garman said in an interview in Singapore on Sept. 4. “There are still multinational companies that remain in older properties so one can argue that there is sufficient demand that can be ab-

sorbed in this new district.” Rents in Marina Bay posted the strongest start to a recovery with rents climbing 10.9 percent in the three months ended June from the March quarter while the vacancy rate declined 2 percentage points to 3.6 percent. Landlords may be about to cash in on economic growth in the island nation, Singapore last month raised its forecast for economic growth to a range of 2.5 percent to 3.5 percent this year. The government previously predicted growth of 1 percent to 3 percent. The economy expanded 2 percent during the first half of the year , Prime Minister Lee Hsien Loong said on August 8.

Colliers International recently opened an office in Myanmar. This is the real estate firm’s 39th in Asia. Heading the Yangon office is Tony Picon, who was the head of research at Collier’s Bangkok office until his promotion. One of the challenges he has to face is the very high cost of office space in the country. The percentage of investors in London properties that want to increase the proportion of their exposure to the UK market for 2013. While the numbers indicate how hot the London market it, pundits are warning that it could cool down to 45% in the next 10 years and to 38% in the next 20 years. The investment return on Dublin property in 2012, according to a report by the IPD. The figure is more than twice the 2.5% average investment return for Europe. Besides the high return rate, other reasons why investors are attracted to the Dublin property market are the drastic cuts in stamp duty to 2% from 6% and capital gains tax incentive for properties purchased in 2013 and held for seven years. The figure represents the growth rate of land transfer fees in four key Chinese cities, indicating the red-hot status of the property market in China despite cooling measures introduced by the government. The total amount was CNY 141.18 billion yuan (USD $23 billion) covering the months January to May 2013 for the cities of Beijing, Shanghai, Guangzhou and Shenzhen. The number of transactions with foreign property investors that Japanese broker Sinyi Realty handled for the first six months of 2013. Volume was almost JPY ¥11.5 billion (USD $115.7 million). This indicating the growing interest of overseas buyers in Japanese property following the cooling measures put in place by Japanese Prime Minister Shinzo Abe. Among the buyers were investors from Taiwan, China and Singapore.


INTERNATIONAL NEWS OC TO BER — NO VEM BER 2013

London calling I

t is noticeable that offshore purchasers of UK properties tend to look at areas in the greater London metropolis that are home to many of the ‘new build’ properties. These investors tend to concentrate their attention on central London (zones 1, 2, and 3 are regularly mentioned). In many cases, of course, there is good reason for purchasing newly constructed property in central London. These reasons include some of the most cutting edge architecture to be

10

RICHMOND UPON THAMES Investors are increasingly attracted to property within a stone’s throw of central London.

found in any major city in the world, excellent pricing compared to older, more established areas and an opportunity to enjoy ownership of an asset that steadily grows in value.

However, those looking to make a home or an investment in the heart of ‘Cool Britannia' might want to expand their focus to include properties which are not new build. The Pound Sterling is currently weak, but slowly strengthening, and appears to be a solid bet to strengthen still further (in the absence of global calamity or major economic hiccups). Forecasts for the recovery of the UK economy are conservatively optimistic. Investment in prime

© MAXWELL HAMILTON / FLICKR

Why does the capital of the United Kingdom still captivate property investors?


INTERNATIONAL NEWS O C T O B E R — N O V E M BER 2013

London locations is viewed by many industry pundits as a low risk option in a volatile global marketplace, and is certainly at the forefront of prime property high performers in the UK, if not the entire European continent, especially given the macroeconomic wobbles that are still causing ripples in the property market across the English Channel. Interestingly, sales of GBP5,000,000+ housing correlate closely with movements in the gold price – could it be that investment in GB property is seen as a safe haven for those fleeing global uncertainty, in the same way as gold? In terms of the business of making and managing money, London is perhaps not the lone heavy hitter that it once was (it now certainly has some competitors in Asia nipping at its heels and it currently shares the honours with New York). It remains however a financial heavyweight. Home to the Bank of England, London Stock Exchange, and Lloyds of London, most of the world’s top companies have their offices or headquarters in London, and there are more overseas banks on the High Streets of England’s capital than in any other international city. London offers a diverse range of people and cultures and an immersive polyglot experience for those who call the city home. With more than 30 languages spoken across the city, living, working and playing in London can be a uniquely global experience. Combine the sounds of the buzzing London street scene with world class cuisine (how times have changed), a vibrant fashion scene, a thriving and open minded attitude towards the arts and more than a smattering of history and you will begin to understand why London broadcasts a siren call to property investors across the globe. More than just a city of bricks and mortar, London is both a lifestyle and a mind-set. Mercers 2010 Cost of Living Survey ranked London as the 17th most expensive city in the world. Estimated 5 year property price growth, Gtr. London, 2011-2015 : 29%, and escalating. Now 17th on the list of most expensive cities to live in may be a dubious honour at best, however it bears repetition that the attractiveness of a city

is dependant on the balance between cost and benefit. It seems that even at the start of the investment evaluation process our minds, often unbeknownst to us, are busily balancing a dip in the bank balance with some very important upsides. Compare for instance London and Singapore. On the one hand you have the UK’s capital city coming in at 17th most expensive in the world, and on the other hand you have Singapore coming in at number 5. It's all about lifestyle, safety and and other tanglble attributes that are offset against each other.

In short, equity, not borrowing is key You can observe the prime markets for decades and as some contributors to this article know, there seems to be very little correlation between ups and downs and mortgage rates. So what factors are influencing the cost of borrowing money for property investment purposes? Brenda Broster, Director, Phoenix Property Services, London maintains that it’s equity, not borrowing that drives property value in London. “We see all sorts of factors that have a direct impact on the pricing of both established and ‘new build’ properties. In our experience it’s new wealth, bonuses as well as domestic and overseas savings and investment that drives these markets. In short, equity, not borrowing is key.”

Despite draconian new taxes imposed by the UK Government on property investment in the March 2013 budget, most notably an increase in stamp duty, overseas equity continues to roll into London, particularly for higher value houses and luxury apartments where price growth and transaction volumes have been surging. London is a big city and, whereas overseas investors express initial interest in central London, there is a considerable volume of prime property available in areas such as Elstree, Barnet, Harrow, Kingston, Putney, Richmond, Merton, Kingston, Bromley, and other suburbs. London’s infrastructure is such that central London is easily reached from any of these locations, and they should also be considered by investors. For Broster, it is these outlying areas, rather than central London that may represent the best value to potential investors ‘ “We’re seeing a constant and sustained interest in the outlying areas of the capital city. These ‘satellite’ locations can represent both exceptional value and excellent returns for investors over the medium to long term.” MEANWHILE... Eric Schmidt, Executive Chairman of Google, is house hunting in Holland Park and Chelsea, for a mansion costing approximately £30 million. This is in order to oversee the new Google European headquarters being built near Kings Cross London. London, for Schmidt, as for other millionaires and billionaires from round the world, is a very solid place to invest money. Top bracket properties are snapped up every day of the week in Knightsbridge, Regents’ Park, Belgravia and Mayfair as Russian oligarchs outbid each other. Vast mansions in Kensington Palace Gardens, London W8, the private road guarded by police near Kensington Palace where the young royals, Prince William, his wife Kate and Prince Harry live, are fought over by these billionaires and the prices go up and up. In the last thirty years apart from an occasional blip, property prices in London

11


INTERNATIONAL NEWS OC TO BER — NO VEM BER 2013

SOME EXAMPLES

Milliners House

Regent Canalside

Riverside Quarter Wandsworth London SW18

Camden Road London NW1

APARTMENT 1

Bedrooms

2

Bedrooms

3

Bathrooms

2

Bathrooms

3

Situation

A fantastic contemporary apartment with Balcony overlooking Regents Canal.

MODERN RIVER FRONTED

Fabulous contemporary apartment with 2/3 double bedrooms with stunning, uninterrupted south-westerly views of The Thames. Set on the 3rd floor of this popular riverside development, this home offers great living space and natural light throughout. With a large double-aspect reception and fully integrated open-plan kitchen, both with access to a private balcony, a welcoming entrance hall, master bedroom with en-suite bath, separate shower, dressing area (formerly a 3rd bedroom), whilst a 2nd bedroom with en-suite bathroom provides further access to the balcony. In addition, the property includes 2 secure underground parking spaces, whilst residents of Riverside Quarter enjoy the use of a modern gym, swimming pool and 24 hour concierge. Thirty five minutes into the centre of London.

Situated in the heart of Camden this amazing newbuild apartment has a hardwood flooring to hall, reception and kitchen, down lighters in all rooms, under floor heating, bespoke kitchen with stainless steel oven, integrated appliances and glass splash backs, high quality bathroom fit out, veneered interior doors with chrome fittings, video door entry system, canal view balcony. Regent Canalside is a collection of 52 aspirational apartments enviably located in the heart of London’s coolest postcode. Famous around the world, Camden Town is a vibrant and edgy quarter of London with an eclectic mix of culture, food, fashion and music. The development is hugely popular with 55% of availability already sold.

12

of choice. Paperwork to purchase a place in London can be pushed through in less than a month if you find a good lawyer. It is even possible to instruct your lawyer to perform a hand search to ascertain whether the local borough council has any plans to build a railway or another road for example near where you are planning to buy a house or apartment. Suitably qualified people can obtain mortgages of 70-80%. This can be interesting if you want to buy a property and then rent it out. There are numerous buyto-rent deals. Even in the more central parts of London properties in the ‘Goldilocks’ price range’ (not to much and not too little) are freely available. All of these above properties would rent out well. There is a shortage of rental properties in London at all times.

Brenda Broster Director, Phoenix Property Services, London

2 bedroom flat on one of central London’s Bedrooms

2

Bathrooms

2

Small Study

1

The apartment is arranged on the first floor of this popular portered mansion block a short walk from the shops in Bond Street and Regents Street. Accommodation comprises; Entrance Hall, Reception room, Two bedrooms, one en-suite shower room, second bathroom, small study, separate cloakroom and kitchen.

www.faronsutaria.co.uk

www.faronsutaria.co.uk

www.riverhomes.co.uk

CONT R IB UTOR S

APARTMENT

Located behind an attractive communal green, discreetly tucked behind Hampstead High Street, a very bright and tastefully decorated mid-terraced modern house with the benefit of a westerly facing private patio, integral garage and off street parking. Accommodation further comprises entrance hall, 27’ reception/ dining room/kitchen, principal bedroom suite with dressing room and private balcony, two further double bedrooms, family bathroom, shower room and store rooms. Located only yards from the shops, restaurants and transport facilities of the Village and the Heath.

www.faronsutaria.co.uk

have increased steadily. Anyone investing for the long term can be assured that their money is safe. Nor are there any restrictions on foreigners buying properties. If you have the money you can buy anything you please. The British government has recently announced assistance for young people wanting to buy property. The government will support buyers by making available a loan representing approximately 15% of the purchase price provided the young property buyers have 5% of the purchase price. The deposit required by lenders is approximately 20% thus enabling buyers to get on to the property ladder. This has also started helping the market to move upwards yet again. For more moderately well heeled overseas investors there is a huge amount

£895,000

Located in Hampstead Village, a three bedroom house with a westerly facing patio, integral garage and off street parking.

PROPERT Y FOR SALE

Reception

Age

London W1B

in Vane Close, Hampstead

£1,650,000

£880,000

£1,500,000

Modern Town House Portland Place

THE KEY FEATURES 1 Interior designed 2 Popular period mansion 3 Long lease 4 Porterage 5 Intercom 6 Two passenger lifts 7 Lease period: 112 years (approximately) 8 Service charge: £5488.74 per annum www.Jeremy-James.co.uk

When the right rental price is placed on a property it will rent out within about three weeks. Gaps in rental income are few for the savvy investor. “When a man is tired of London, he is tired of life, for there is in London all that life can afford” said Samuel Johnson, a famous eighteenth century English writer. Today there is more of everything: theatres, museums, a zoo, Buckingham Palace, the Changing of the Guards, nightlife, jazz clubs. It is all available to be savoured in what remains one of the most vibrant cities in the world.

Gloria Stewart Property expert and award winning journalist based in the United Kingdom


COMMENTARY O C T O B E R ­– N O V E M B E R 2 0 1 3

Outlasting a recession

Can property investment be the answer? Income producing investments at a time of low interest rates.

By James Norman

A

s the Global Economy continues its slow recovery from the worst recession in recent history, the on-going issue of low interest rates continues to hurt those reliant on their savings to generate an income. As we begin to see the so-called ‘greenshoots’ of recovery, so continues the speculation about when and how far interest rates will rise as the global economy improves. It doesn’t take a rocket scientist to realise that, once tax and inflation are taken into account – it will be some time before cash on deposit will provide any income in real terms, let alone one that would provide savers with an ‘adequate’ level of income. If you refer to my previous article on Asset Diversification (Dec 2012 – Jan 2013 issue), I discuss cash as an essential element in any investment portfolio – a ‘cash-cushion’ (ideally 3-6 months’ salary) to meet short term obligations/emergencies, but also as part of a well-diversified and risk-managed portfolio. Whilst this remains true; it’s evident that surplus money on deposit needs to be working harder just to keep pace with inflation both now and over the medium to long term. This article will focus on alternative methods of saving, other than cash. In a time of low global interest rates and

14

economic uncertainty there are ways in which investors can generate income, whilst preserving wealth and minimising risk.

Fixed interest investments should play a vital role in any well-diversified portfolio, but as with shares, these are subject to the volatility of the economic cycle.

Fixed Interest

Shares/Equities

Fixed Interest Loans are typically loans made by investors to companies (corporate bonds) or governments (gilts). This type of investment can be made by purchasing individual bonds or gilts (often high minimums e.g. USD $250,000) or by investing in a fixed interest fund. Within a fund, money is pooled together with other investors and looked after by a professional fund manager (as above). In turn, the fund manager invests in a range of fixed interest holdings which are generally traded. The investor has the benefit of diversification to reduce risk as well as the ability to receive regular income payments from the fund. At times of economic uncertainty, this type of investment become popular as investors pursue the perceived safety of a fixed return. It’s worth noting however that this type of investment is not risk-free, so the value and return of fixed income holdings fluctuate from time to time and are prone to inflation-risk. Corporate bonds are usually deemed a higher credit risk than government bonds - as a result corporate bonds usually offer higher interest rates.

An investment that refers to the buying and holding of shares of stock on a stock-market. The value of shares fluctuates depending on the performance of the company or views on how the market/economy as a whole is likely to perform. Volatility therefore refers to the short-term fluctuation in the value of this investment. It’s worth noting that historically shares have outperformed all other asset classes over the long term – naturally we can’t guarantee this will happen in future, although performance data from the past 100 years has demonstrated that investors have been rewarded for the greater risk involved in investment based on shares rather than bonds or cash. One useful feature of share investment is the existence of dividends – profits of the company passed on to shareholders. This existence of dividends is particularly useful when combatting the effects of inflation on individual spending power. Share investment therefore has long been seen as an important part of a well-diversified income-seeking portfolio, particularly when the scope for capital growth exists over the medium to long term.


COMMENTARY O C T O B E R ­– N O V E M B E R 2 0 1 3

CASH

FIXED INTEREST

EQUITIES

COMMERCIAL PROPERTY

RESIDENTIAL PROPERTY

Liquidity, instant access

Increased income achievable if investor is willing to take risks

Has outperformed cash over the long-run

High potential income levels

Provides a place of primary residence/holiday home – lifestyle investment

Security of capital

Limited potential for income growth as coupons (interest) is fixed

Potential for rising income in the shortterm

Rent often increases more quickly than inflation, building larger income over time

High potential income levels

Income fluctuates with interest rates

Capital losses may occur in periods of volatile interest rates

Potential for significant capital gains

Capital growth achievable over the medium to longterm

Rent often increases quicker than inflation, building larger income over time

Inflation erodes the value over time

High minimum investments

Value of investment may be hugely volatile

High minimum investments

Capital growth achievable over the medium to long-term

You may lose all of your investment if the company fails

Delays in buying/selling activity - may result in delays in investors receiving back capital

(if investing directly)

Limited potential for capital growth

POSITIVE

NEUTRAL

(if investing directly)

Commercial Property Whilst investment in retail parks, warehouses, offices and shopping centres is out of reach of most – commercial property has presented many with an opportunity. Property values saw unprecedented declines following the credit crisis and have since seen a strong recovery. Investors are increasingly recognising the importance of commercial property in a diversified income-generating portfolio. A property fund that combines the investments of a large group of individuals allows even the smaller investor to access commercial property. Capital appreciation provides an attractive future source of profit, but it’s the consistent rental income paid by tenants that generates the income-producing element.

legality of ownership, high maintenance costs)

Delays in buying/selling activity - may result in delays in investors receiving back capital

NEGATIVE

Naturally, choosing the right company in which to invest is a minefield and putting all your eggs in one basket with just one or two companies is inadvisable. This is the very reason equity funds have proven popular with my clients – in this case your money is split across a wide range of companies and actively managed by a fund manager.

Significant risks/barriers to entry (e.g. deposit requirements,

Historically, the commercial property market has not performed in sync with shares and fixed income, demonstrating low volatility. Commercial property therefore may provide that key income component with the added benefit of reduced risk and additional diversification.

Residential Property The above three asset classes can all be accessed directly by the large investor or indirectly via a fund for the smaller investor. An alternative, or preferably an additional approach can be investment in residential property or even land as an income producing investment. Residential property has a clear advantage compared to the other approaches – it can provide a roof over your head. This investment can act as your prime residence or perhaps as a holiday-home in the sun. It may therefore be just that balanced lifestyle investment that savvy investors are always looking for. Property can generate profit through income (e.g rent) or through capital appreciation (e.g. profiting from a resale) but in most cases - both. Risks and barriers to entry can include high deposit requirements (often 20% or more),

volatility in prices, legality of ownership, high mortgage repayments, inconsistent rental income, high maintenance costs to name but a few. Property prices generally, after significant falls in 2008 and 2009 stabilised between 2010 and 2013. In Asia and London values have largely recovered but fundamentals remain fairly weak elsewhere. Rental yields are the key when looking at income from a property investment. Within key Asian markets; Indonesia leads the way with rental yields of 8-12% a definite possibility. Philippines is a close second at around approximately 8%, Malaysia and Thailand 6% and Singapore around 3%. In conclusions, a diversified approach should always be taken when approaching any investment, however if done correctly the ideal risk-reward profile can be achieved. For more information on the range of options available, feel free to contact me.

JAMES NORMAN is a Consultant for the Henley Group (www.thehenleygroup.com.sg) in Singapore and a regular contributor to PropertyLife.

15


COMMENTARY O C T O B E R ­– N O V E M B E R 2 0 1 3

Investing on the right side of the tracks When success or failure in property investment hinges on the smallest detail. By Scott O. Talbot UCHK CEO

P

roperty investment is a complex matter. Sometimes the smallest detail can make or break the success of an investment in an apartment or home. Understanding these factors and investing with keen attention to the matrix is critical - or if you are not sure about any of the factors that may contribute to success or failure at least seeking the advice of a property expert who does. One of the most important elements of a property purchase may be summed up by the often repeated mantra of ‘location, location, location’. I’ll give a quick and very basic example of the concept applied to two hypothetical apartment homes, identical in every way in terms of value, design and quality, and every other aspect of the home once you step out of the elevator. Let’s say these apartments have two bedrooms, aimed at the young family. Now, if one home is at the north end of the street facing a busy highway, and the other is at the opposite end in a quite enclave of tranquility and safety for the kids to play, which home is going to

16

be the more attractive to rent, especially for a family? Amenities as well as location should be considered before any real estate investment acquisition. Where are the schools, shops, restaurants, transport links and entertainment relative to this property? I often have clients seek advice on housing estate developments that pop up on the outskirts of a city. These homes represent great build quality, peace out in the suburbs with an abundance of trees and grass. But whichever way you look at it the fact remains, the hour plus commute each way to and from the city is going to be a burden, and the lack of amenities will soon become a frustration. And if this property is investment stock the capital growth is going to be much slower compared to inner city, well situated property. The simple supply and demand economy dominates the property market. It usually takes a 20 year cycle for suburban developments to catch up until there has been sufficient build up of local amenities. There may be one or two exceptions such as areas where massive infrastructural development is scheduled or fully integrated

developments, but by and large if it hasn’t actually been built and a buyer can see, and touch the value add, then be wary. There are too many buyers who have been badly burned by the promises of regional or local government when it comes to infrastructure projects. On a personal note, last year I decided to relocate to Beijing. Upon arrival I found a French Villa style apartment complex - the ‘Riverside Baroque Palace’. The development was luxurious, set in beautiful grounds, an immaculate building and the staff were all wonderful. I immediately signed a six-month lease. Now, whilst I am an Australian real estate expert, I wouldn’t know what is up or down in Beijing and whilst my knowledge and experiences have been tempered over many years of property experience, I will also admit that my confidence impaired my judgement and sharing this personal experience demonstrates the importance of that all important location, location, location. While there was some urgency for me to get settled, a month later I was packing my bags - there had barely been time to


COMMENTARY O C T O B E R ­– N O V E M B E R 2 0 1 3

unpack in the first place! I was moving to a different complex less than 2 kms away, at the Sanlitun SOHO. The reason was quite simple. While the property provided everything I could wish for internally,  the surrounding area lacked all the external amenities I required in order to enjoy the quality of life that is essential for any expat to maintain some semblance of sanity, such as a good coffee shop, dry-cleaning and fine dining (even a burger would have been welcome every now and again if the truth be told). I was willing to surrender the lease, at no little cost, to relocate to an area that provided all the right amenities for me personally.  Despite my expertise in Australian property and an acute understanding of location factors, I paid the price for not knowing, and not seeking advice on the lay of the land in Beijing. If I had done so I would have avoided a potentially costly experience . This is where an understanding of the term location, location, location is absolutely 100% essential for those who are relocating to somewhere new, be it a new neighbourhood, or a new country. The theory and application of a solid knowledge of your location is going to make all the difference to your quality of life.  One of the time-worn and tested sayings in the property buying game goes something like ‘is it on the right side of the train tracks?’ Such a fine line, and the margin for error is even finer. If all the amenities and retail opportunties are on the opposite side then you’re definitely on the wrong side of any transaction.

Those living in the west will have higher stress levels and are more prone to accidents. There is also a far older location myth based on sunset and sunrise. In large cities commuters who live in the east have a much easier life than those in the west. The reason is quite simple.  The resident from the east goes to work with the sun at their back and returns home in the evening with it setting softly behind them. The eastward traveller has the opposite with the sun ahead and full in their eyes- glare, stopping, starting, horns and havoc. Not the ideal way to either start or end a long and demanding day.

SCOTT O. TALBOT is the Managing Director of UCHK Consulting Limited and one of Australia’s most respected international businessmen, community leaders and philanthropists. He has over 25 years of experience in strategic property investment, business development, politics and philanthropy.

Those living in the west will have higher stress levels and are more prone to accidents. These figures can be verified by insurance companies who confirm that there are more fender benders involve sun-facing drivers. Maybe there is something to this Astrology malarkey after all and the alignment of stars and planets does have a direct impact on your lives – who knew? It all comes back to location, location, location. You can have the plushest apartment within a 10 city block radius, overlooking the most magnificent vistas imaginable, but without the ability to pop down to the shops for some sugar to put in your coffee when you’re taking in the fabulous view, your quality of life takes a dive. The school may be excellent for the children, but there are no parks for them to play in or to take the dog for a walk. All things come in to consideration and are aggregated. This is why some apartments may lack architectural finesse and luxury, but their location is perfect and therefore they provide great investment returns through both capital growth and rental yield. Often property agents rely upon printed materials for their information. A local expert, however, can give an assessment of the area, the amenities and the opportunities. This knowledge, coupled with the building quality and construction, will give you the full picture – as with most things in life knowledge is power. Make sure that you’re in the know before you reach for your chequebook. The view from the balcony can only go so far to providing you with true happiness and a great investment.

UCHK Consulting outlines a clear path for existing and potential property investors to empower them to achieve phenomenal returns on their investments. For more information, or to speak to a qualified consultant in your area, please visit www.property.org.au or email info@uchkconsulting.com.

17


feature

Culture Cuisine

Choosing the right investment property can be a complex process. Can an evaluation of the food and culture of individual countries make them more attractive investment destinations? Read on BY VITTORIO HERNANDEZ

18

increase in demand for alternative types of accommodation, beyond the run of the mill hotel, or resort. It could be because the holidaymakers today want to immerse themselves in the lifestyle of the place they are visiting. Or that value for money holiday homes are often nearer to many somewhat isolated dream vacation spots. Sometimes the hotel or resort experience is too structured and a holiday rental can provide endless possibilities for exploration of oneself and the surrounding natural attractions, as well as immersion in the local culture. But in the end many consumer are choosing holiday buy-to-let units because they allow the traveler to feel at home, in spite of being halfway around the globe. Putting together this feature was a matter of mixing business with pleasure (and leisure come to think of it) for Property Life, as we reviewed both the cuisine and cultural landscapes of several countries known for their year-round festivals and fiestas. At the same time, the writers had to tap into their collective analytical skills and knowledge of the Southeast Asian and global leisure markets by linking these popular festivities with

cities or areas in particular countries which offered significant value to those investors who may want to leverage the buy-to-let holiday home trend across various investment and tourism hotspots across the globe.

Seven-nation journey In Vietnam, Property Life rediscovered the wonders of an Asian destination once associated only with the Vietnam War of the 1960’s and 1970’s. From beginnings rooted in Miss Saigon and Apocalypse Now imagery, we saw a rising dragon in the Vietnamese economy and we took in the culinary wonders that Ho Chi Minh City and Hanoi offer to visitors, such as its famous spring rolls, bun thang and rice cakes. We delighted in trying to understand the soul of Vietnam as we searched for the story behind the country’s famous Cold Food Festival before we finally investigated why the two largest cities in the country are the best places for property investors who want to dip their toes into Vietnam’s cultural complexities and great natural beauty via regular vacations. Staying at their buy-to-let homes, while earning an income from the property during the rest of the

© JSNFLO / SXC.HU

P

eople travel for various reasons. Some want a simple change of scenery. Others want to use the time away from mundane day to day responsibilities in order to recharge both physically and spiritually. For those seeking the finer things in life, travel is an opportunity to broaden their horizons by having the chance to experience other cultures, while for those whose tongue and palate need exposure to new and exciting flavours, a trip is an opportunity to try the tastes of foreign lands. In the case of business-oriented people, travel is a chance to look for investment opportunities or explore new possibilities and partnerships with other enterprises that share strategic goals or have similar target markets. For people who own holiday buy-to-let properties, going on a trip overseas always has a dual purpose: That is to combine leisure with business. Travel has become an important part of many people’s lives as more join the swelling ranks of the middle and upper economic classes and with the increase in travel activity comes an


year by renting the same unit to fellow Vietnam enthusiasts. From Vietnam, we moved on to another Asian favourite tourist destination – Thailand. Property Life discovered why the land once called Siam plays host to the most visited city in the world, Bangkok and we reviewed the numerous festivals that the Thais and visitors to this gentle and beautiful land celebrate almost every month. Outside of these regular festivals there are special festivities earmarked to celebrate other aspects of Thai life, particularly the spicy Thai cuisine that is a high point of any foreigners visit to this Asian paradise. The festival scene is only a single reason to consider purchasing a holiday rental home in Thailand’s popular holiday spots such as Bangkok, Phuket or Pattaya. Property Life looked into the recommended hotspots for buy-to-let properties in this South-East Asian Garden of Eden, the prices of existing homes and rental rates so that our readers will find it easier to decide where and when to invest and how much to spend on a vacation home in Thailand.

From Thailand, Property Life island hopped to Indonesia, the world’s largest Islamic nation. This country, we found out, has 80 festivals annually, ranging from religious festivities marked by either silence or white-hot levels of noise, all the way to celebrations of cinema and kite festivals. Since Indonesia is a multi-cultural country made up of mainly of Malay and Chinese, it was not surprising to see that one of its major festivals is the Chinese Lunar New Year. The country is also largely an Islamic nation so Ramadan features heavily when the locals are planning annual celebrations. The other surprise for PropertyLife was finding out that Jakarta, Indonesia’s capital city is the best place to invest in property despite recent amendments to property ownership placing a 70year cap on foreign ownership of property. After these three Asian nations, PropertyLife headed for a region associated with cruises – the Caribbean, specifically Barbados. This very popular tourist destination, famous for its beautiful beaches, turned out to have the perfect climate for real estate investment. Large numbers of tourists, a stable political and social environment and government commitment to business mean that investment in this region is both stress free and potentially profitable. Of course it’s not all sand, sea and crystal clear water. The islands offer numerous and varied festivities featuring anything from Calypso music to street market fairs. Not far (in geographical terms at least) from the Caribbean is a North American nation that has also emerged as a growing tourist destination, Mexico. A review of Mexican fiestas and food goes some way towards explaining why this country is another investment and tourism hotspot. The sheer number of these grand Mexican celebrations, plus the warmth of the Mexican people, combined with inviting property statistics such as rental yields as high as 7.76% are reason enough for foreigners enamored with uniquely Mexican delights to buy a holiday home in Mexico City, Merida or Puerto Vallarta. Another short plane ride to the North and we find ourselves in Florida, the Sunshine State, land of the Alligator and real estate opportunity. Visitors to Miami would be mistaken if they think the spirit of Miami Vice has completely died. There is still a palpable air of excitement about this town. Ninety million people visited this American state in 2012, the strongest proof that it is simply white hot tourist magnet and an excellent area to evaluate for the purchase a buy-to-let property.

Visitors are not going to run out of festivities to enjoy, starting with the Orange Bowl in January and the Coconut Grove Arts Festival in February. As the rest of the year doesn’t see Miami calming down on the festival front. There’s the Calle Ocho Festival, Miami Broward Carnival, the Sunfest and so many other distractions that the potential investor may be in danger of not getting down to the business of really evaluating the investment opportunities. Then Property Life moved on to two European destinations that should not be missed. First stop is sunny Spain. The fiery Latina character of Spain is reflected in three key festive events which we cover in some detail. The three key celebrations are Spain’s famous bullfights, fiestas and the Tomatina festival where it is legal to lob a red ripe tomato at anyone in your line of sight. Not just one, but thousands of kilos of tomatoes leave celebrants literally seeing red. However, when it comes to property purchases those with unimpeded vision will see a real opportunity. Anyone who has spent any time in Spain will agree a holiday rental home in Madrid, Valencia or the Canary Islands may represent the investment opportunity of a lifetime.

A booming sector The feature offers only glimpses into the buyto-let business possibilities in a few tourist destinations. Most experts agree that the buy-tolet sector is booming as potential landlords are tempted by lower house prices, escalating rents and better mortgage deals with key lending rates in a number of economies hitting recordlow levels. The buy-to-let business has also received a shot in the arm due to the fact that homeowners can no longer count on steep rises in house prices in the short to medium term. Today underperforming assets must be made to sweat. The perfect combination of increasing rental yields, high tenant demand and low supply gives people with extra funds a very good reason to evaluate investing in holiday homes – in the process giving them the extra benefit of having a vacation accommodation in their favourite festival-loving country and earning rental income during the rest of the year when they are forced to eke out a living in anticpation of the next vacation opportunity. We feel for you. Although it’s not yet vacation time we hope that we can offer you at least a glimmer of sunshine with our feature articles.

19


FRESHLY GROUND The flavours of Vietnam are bold and fresh. Will this country deliver the same excitement to investors?

V I E T N A M

A Vietnamese vacation investment

S

ince time immemorial, the dragon has always been the symbol of strength, power, and nobility. Because of its symbolic significance, some countries in the Orient adorn their ceremonial goods, household contents and cultural items with images of various types of Dragons, and the literature of countries across the region is filled with depictions of this mystical creature. There are in fact countries, which regional fables tell us are the literal descendants of dragons. But if the potential investor looks carefully then there is one country in the region where the geography as

20

well as economic progress mirror the good luck and prosperity promised by the dragons of old, and that country is Vietnam. Shaped like a letter ‘S’ in the southeastern corner of the Indochinese peninsula, Vietnam is said to have formed through the union of King Lac Loc Quan (Dragon Lord of Lac) and the fairy princess Au Co. Their eldest son, Hung Vuong, is believed to be the founder of Hung Dynasty, the first dynasty that lasted for a thousand years. This period is also the cornerstone of agriculture, particularly rice farming in the country. Although legends and myths have a way of painting the picture of Vietnam as an almost mystical country, its history

hardly resembles a fairytale, and for a long time there did not appear to be any possibility of a happy ending. For many decades people would associate the country with suffering, geopolitical unrest, wars and battlefields. While it is true that the Vietnamese have seen some of the most brutal military campaigns in modern history, the conflict of the Vietnam War was to be the crucible in which a nation was forged. But as Vietnam gradually shed its image as a war-ridden country and transformed itself into aa Asian treasure, tourists began to realise that the culturally rich and amazingly beautiful nation of Vietnam could be a tremendously interest-

© FROM LEFT: STACIECATS, WORDRIDDEN / FLICKR

A treat for health and history buffs alike, this rising dragon celebrates food and culture like no other country in Southeast Asia. The increasing numbers of tourists that are immersing themselves in the cuisine and culture of the country means that there is significant upside potential in the country’s buy-to-let market. BY JONALYN FORTUNO


ing place to visit. And just like a dragon recently roused from decades of slumber, Vietnam is now unfurling its wings as its economy and tourism industry prepares to take flight.

A REGION SPECIFIC EXPERIENCE Each part of Vietnam delivers its own unique taste - and property investors are finding that each region requires a different set of criteria for evaluation.

A rising dragon The country may not have blossomed as fully as its neighbours, at least not yet, but it’s worth noting that for the past decades, it has undergone dramatic changes particularly in the economic context, where it has delivered an average of 7% growth on a year-on-year basis. Even the US has taken note of Vietnam’s progress, noting that the country was ‘catching-up’ with both its neighbours and the developed world. It is leveraging the twin engines of economic growth, controlled industrialisation and infrastructural transformation. The Vietnamese real estate market has also seen a vast improvement with overseas investors starting to queue up to enter the country. Property investment is today is significant contributor to the inflow of foreign capital into the economy. To further boost the housing sector, the government has recently unveiled a stimulus measure in the form of a VND30 trillion (USD $1.4 billion) bank-loan package. The government’s efforts to improve the Vietnamese investment climate are readily apparent when evaluating the slew

of positive legislation introduced in the recent years governing investment and ownership issues. And this approach seems to be finally paying off, as a study titled ‘Investing in Vietnam’ stated that the country is becoming one of the most attractive destinations for foreign investments. With Vietnam poised to becoming one of the major economic powerhouses in Southeast Asia, it not only attracts the attention of multinational companies and sundry investors, but visitors as well.

Festivals promote the country’s culture and cuisine Vietnam’s rising popularity can be gauged through the growth of the country’s tourism industry. In a recent survey by market intelligence firm, Euromonitor International, Vietnam’s Ho Chi Minh City ranked 33rd on the top 100 city destinations around the globe. According to the firm’s head of Travel and Tourism Research, Caroline Bremner, ‘Vietnam showed a particularly strong

performance with Ho Chi Minh and Hanoi experiencing over 40% growth for the second consecutive year.’ With its tropical islands, beaches and unspoiled rainforest, most people would be tempted to break away from their daily fast paced tourist hustle bustle and just take in the country’s natural beauty. The opportunities to do so are almost unlimited, fueling even more interest in the country as an developing ecotourism destination, as well as a place to just lie back and let the tropical sun burn away stress. Of course, in a country where almost every meal is prepared from scratch, with fresh natural ingredients that are produced locally, you expect that the cuisine will feature a mixture of fresh herbs, meat, fish, vegetables and other, more exotic ingredients. This has led to a renewed interest in Vietnamese cuisine and a growing recognition of the regions’ food as a gastronomic treat for everyone, and a real treat for health conscious tourists. Food plays a a very significant part in the country’s society and culture. And if there is one mantra that sums up the Vietnamese people’s love for food it is that ‘eating comes first’. Throughout the country’s history, ritual ceremonies and celebrations were never complete without the preparation and consumption of food during the religious and cultural rites praising and in some cases appeasing the guardian spirits of the village or town. Over many generations, each Vietnamese region eventually developed its

21


feature

22

As World Guide puts it, ‘More festivals, events and seasonal things to do happen in and around Hanoi than anywhere else in Vietnam with dancing and eating being the norm.’ Then again, what else can you expect from a city that gave birth to the country’s national dish, Pho. Indeed, Hanoi is not just an economic and social hub but also the centre of cuisine and traditional culinary art in the country. VietnamNet Bridge wrote that Hanoi’s exquisite cuisine is one of the key drivers of the city’s tourism sector, thanks to its wide-array of dishes and flavours that draw tourists to a city that styles itself as the gastronomic capital of Vietnam. The proof is in the eating and more and more foreign visitors are attracted to the city, leading to a surge in the numbers of international arrivals, with figures reaching 2.1 million in 2012 alone. Hanoi’s Department of Culture, Sports, and Tourism said that the figure is up by 11.3% from 2011. It has become customary for tourists to make a beeline for street food boulevards and gorge on Vietnam specialties such as Pho, ChaCa, Nem Ran, fresh spring rolls, bun thang, and rice cakes. And which better place to find them than in Hanoi’s Old Quarter?

CHILLED OUT Food may be served cold on the third day of the third lunar month, but your experience of Vietnam will warm your heart.

The Old Quarter is a maze of ancient streets and guild houses all built as far back in the 13th century. Tourists can find a taste of almost everything Vietnamese in this quarter. It is not just home of the city’s largest market, Dong Xuan, but also the place for excellent hotels and restaurants, and of course, street food. And as CNN Travel puts it, the Old Quarter is ‘Southeast Asia’s ultimate maze of good eats, great shopping, beer bars and local color’. But Hanoi’s long list of specialties is in part due to its migration history. Culinary expert Nguyen Phoung Hai said that its ‘cuisine has always been enriched by food from other regions. That’s why the dishes feature a real mélange of flavours.’ According to the website Vietnam Tourism, Hanoi’s cuisine plays ‘an important role in bringing Vietnam’s culture to the world’. Which is why some of them are included in traditional festivals such as the Cold Food Festival (Tet Han Tuc) and Mid Autumn Festival.

Cold Food Festival The Cold Food Festival is celebrated in the Northern part of Vietnam on the third day of the third lunar month. On this day families eat cold food due to a prohibition on the use of fire that has its roots in ancient legend. As part of the tradition, Vietnamese families would serve banh troi (floating cake) and banh chay (lean cake) to commemorate the nobility of the servant named Gioi Tu Khoi. He cut off a part of his thigh and cooked it for the fleeing King who was tormented by hunger. But

© FROM LEFT: AVLXYZ / FLICKR

own trademark cuisine, which largely reflects people’s lifestyle and geographical situation. For instance, in Southern Vietnam, people make use of fresh ingredients and tropical fruits in preparing their meal, whereas Central Vietnam is noted for strong, bold flavours, where the combinations of extreme heat supplied by fiery chilies and strong fish sauce flavours may startle the typical Western palette. The region is also the hub for salt production and the fish sauce industries, which is why these condiments are always present in the cuisine. When compared directly to the cuisine of Central Vietnam, Northern Vietnamese cuisine may be viewed as a bit underwhelming. For many the cuisine of the region is as bland in flavour as the noodles , which are a regional favourite. This preference is largely due to the Chinese influence, which can be traced back many hundred’s of years. If there is one thing that makes Vietnamese cuisine stand out from the rest it is that five fundamental taste elements (sweet, sour, salty, bitter and umami) are always present in the overall dish. The balance between these five elements is one of the many reasons why tourists return to Vietnamese cuisine again and again. And as far as world class culinary delights are concerned Hanoi is one the best place to go. This city has always been popular with tourists in part because it never runs out of reasons to celebrate. Tourists can be assured that a trip to Hanoi during any month of the year will deliver a festival of some kind.


Transaction costs VAT

5%

Buyer

Registration Fee for Real Property

1%

Buyer

VND20,000 (USD$1)

Buyer

0.2%

Seller

VND10,000 (USD$0.6)

Seller

Registration of Title Notary's Fee Land Use Right Transfer Contract Costs paid by buyer

6%

Costs paid by seller

0.2%

ROUNDTRIP TRANSACTION COSTS

6.2%

SOURCE GLOBAL PROPERT Y GUIDE

because he refused to be rewarded when King Trung Nhi recovered his throne, the King ordered that the forest where he and his mother lived should be burned down. This was done in an attempt to urge him to accept the offer. However, Gioi Tu Khoi stood his ground, and thus, both his mother and he were burned to death. Filled with remorse, the King then proclaimed that for three days fire should not be used, therefore food is served cold. Modern day Vietnamese people celebrate this legend slightly differently than has been the tradition in the past. Instead of putting out the cooking fire, they just enjoy cold food with friends and relatives and make offerings to their ancestors. During this occasion, all members of the family are required to come home to help make glutinous rice balls. The shape of these glutinous rice cakes also reflects a connection with the mythology surrounding the founding of Vietnam. The rice cakes symbolise the 100 eggs produced by Princess Au Co, which later hatched into 100 babies, which, according to legend was the genesis of the Vietnamese people. But tourists need not wait for the third day of the third lunar month just to get a taste of these national favourites. In Hanoi, these have become a popular everyday breakfast or snacks and can be easily found in different food stalls in the city, particularly in the Old Quarter. For tro cake, all you need is glutinous rice flour molded into balls and stuffed with small pieces of dried treacle, which is the uncrystallised syrup made during the refining of sugar. Chay cake also uses glutinous flour, but while troi cake is formed like a ball, the former is kneaded into flat rounds and stuffed with steamed, crushed

green beans and mixed with sugar and grated coconut.

Mid Autumn Festival Another festival that features Vietnamese cuisine is the Mid Autumn Festival, locally known as Tet Trung, which signifies the end of harvest. Celebrated every 15th day of the eight month in the lunar calendar, this event is sometimes called the Children’s Festival, as it is tailored specifically for children. According to legend, a group of children had to play alone because their parents are busy during harvest time. But when the harvest ends, those parents make it up to their children, and it’s the Mid Autumn Festival that embodies and reflects their love and appreciation of the children. During this event, children receive various treats ranging from participation in the cultural activities such as parades, games, dragon and lion dances, dancing and singing competitions to traditional cuisines and festival toys. The Mid Autumn Festival is considered to be one of the most fun-filled events in Vietnam, often characterised by the sound of drums and the colourful starshaped lanterns that light up the sky and riverbanks. And of course, it wouldn’t be complete without the moon cakes, which should be eaten with family, friends and relatives. On the night of festival when the moon is at its brightest, the Vietnamese people put moon cakes along with tea and wine on the altar as offerings to their ancestors. Although this festival is celebrated across the nation, Hanoi makes it extra special for children through its own version of the moon cake. Instead of the traditional moon-shaped cake, Hanoi in-

troduced in 1988 the pig moon cake with different sizes— from mother sow to the tiny piglets. The festival and the attendant celebrations have become very popular with kids and tourists alike. Tourists visiting Hanoi during this event will not only able to sample moon cakes but also get to understand Vietnam’s centuries-old culture. For those who really want to get under the skin of the rich Vietnamese culture, Ho Chi Minh is the best city to visit. Besides its rich historical background, the cultural festivals and attractions hosted in Ho Chi Minh City (formerly Saigon) make it the second most popular tourist hub in the country. Statistics released by the Department of Culture, Sports and Tourism showed that the city saw a 8.5% growth in its tourism industry, with almost 3.8 million foreign tourists visiting the city in 2012. While Hanoi is the country’s kitchen, Ho Chi Minh City is the life and soul of the Vietnamese nation owing to its stature as the largest metropolitan area in the country. It’s even been christened the ‘Paris of the East’, which gives some indication of the French inspiration behind its vibrant nightlife. Its elegant boulevards and bustling downtown streets have an unmistakable European feel, which would surprise anyone who still views the former Saigon through an historical lens coloured by memories of the Vietnam War in the 1960s. But then again, the historical background is what keeps the city’s old world charm alive. Without it, the city wouldn’t have had developed its popular tourists spots, such as those based on colonial architecture and its focus on museums such as the War Remnants and Revolutionary Museums in particular— that trade heavily in Vietnam’s sometimes bloody history. The authorities of Ho Chi Minh City have cleverly transformed memories of the Vietnam War as reflected in a mix of reality and blockbuster movies into tourist dollars. Another attraction for the numerous tourists flooding the city streets are the various cultural festivals celebrated every year. Among the major must-see festi-

23


feature vals that are associated with cultural and historical events include Ho Chi Minh’s Birthday and The Fisherman’s Festival.

with decorations and dishes such as roast white pork, and steamed glutinous rice are prepared.

The Fisherman’s Festival

Ho Chi Minh Festival

If there is one thing that’s pretty much sums up the attitude of the average Ho Chi Minh resident it is an unrestrained attitude towards the celebration of any of the many festivals which are at the core of the city experience. The Fisherman’s Festival, for instance, is a boisterous, colourful celebration where local fishermen come together in Can Thanh, to honour the whale, which is considered to be the God of the Seas. During the three-day celebration, harbors, boats, and shrines are adorned

But the celebration viewed to be the cornerstone of the city’s more recent history is the Ho Chi Minh festival. This event is observed to commemorate the birthdate of the country’s national hero and the ‘Father of Modern Vietnam.’ He is widely revered in the city that shares his name. A multitude of parades are held in the city along with cultural performances and candlelight vigils. And just when you thought you’ve seen enough, try turning on the TV and experience an overwhelming number of different programs giving

tributes to one of the Vietnam’s most iconic leaders. If you have a soft spot for spiritual celebrations that involve burning of incense, temple worship and devotee processions, then Buddha’s Birthday Festival and the Thien Hau Pagoda Festival would certainly delight you.

Buddha’s Birthday Around 50% of the Vietnamese population is Buddhist. Thus Buddha’s Birthday Festival, is a celebration of immense importance. Buddha’s birthday is also said to be the day that he achieved enlightenment. This day is celebrated on the fifteenth day of the fourth lunar month and prayers and offering are made all over Vietnam. In Ho Chi Minh City this day is celebrated lavishly in the  Nghia An Hoi Quan Pagoda Saigon.  The temple is decorated extravagantly and monks move out in several processions along the streets, and colorful lanterns are used to decorate all the pagodas.

CLAY POT CUISINE A variety of dishes prepared in the 'clay pot' style only hint at the complexity of flavours that visitors can experience in this fascinating country. Bottom left: Clay Pot Braised Fish.

24

These colourful festivals are the Vietnamese people’s way of celebrating the cultural, spiritual and historical changes that have shaped the nation and allowed it to survive the turbulent times that stretch back hundreds of years. The citizens across Vietnam view such events as a time to give back and pay tribute to the heroes and legends that shaped a community, and country as whole, into the nascent economic powerhouse it is today. It may be a bit soon for investors to break out the firecrackers and beer in celebration of the opening up of the Vietnamese proper-

© FROM TOP: AVLXYZ,, STACIECATS, VIXYAO / FLICKR

Holiday-rental homes for tourists


ty market to foreign investment but there have been some encouraging signs that the country may be developing a tolerance for foreign ownership (or at least foreign capital). Although Vietnam is reputed to be a tricky place for foreign investors particularly where property ownership is concerned, the government is already drafting legal solutions to address some concerns. One of the newly promulgated directives is the so called Decision No. 13, which relaxes property ownership rules for foreigners. VietnamNet Bridge quoted Vo Coung Quyet, CEO of Northern Green Land Real Estate and Service Joint Stock company, as saying that that the recent move will bode well for the real estate market, though it would take at least three to six months for the policy to start working. This is a good start for the real estate revival. Moreover, in a statement with VietnamNet Bridge, Deputy Minister of Construction Nguyen Tran Man also assured offshore investors that he would review the regulations ‘to enable the housing market by providing more favourable buying conditions’. Given the recent changes in the legal framework along with the government’s efforts, now may be the best time to start seriously evaluating investments in Vietnam real estate. Anyone who wants to invest in or buy holiday-rental homes need look no further than Hanoi and Ho Chi Minh City, as they are without doubt the locations that have a reputation for delivering solid real estate returns, especially in the holiday rental market. The excellent reputation of these cities as holiday destinations, combined with the recent figures showing a definite growth trend as far as tourist numbers are concerned, indicate that these areas may be on the verge of a tipping point as far as tourism is concerned. The implications for the rental market are clear. Some property firms have forecast that these two cities may be making some headway toward economic recovery, indicated by statistics showing positive growth for this year. In the recent Knight Frank 2013 report (for Q2 ) on the Hanoi market, it was shown that serviced apartments saw some improvements in occupancy rate. Grade A for example has increased by 86% with an average rent of VND 657,000 (USD

HANOI HUSTLE There are plenty of tourists hitting the streets of Hanoi, and with them comes an opportunity for astute property investors to leverage the increased popularity of the city. © ALEKSANDR ZYKOV / FLICKR

$31.4) m2/month. Grade B, on the other hand, is up 93% with a rental rent of VND 399,000 (USD $19.1)/m2/month. As for Grade C, occupancy rate is at 91% and the average rent is reported to be at VND 281,000 (USD$ 13.4)/m2/month. Meanwhile, in Ho Chi Minh City, CBRE research showed that vacancy levels in serviced apartments have decreased dramatically. Accordingly, both Grade A and B logged a 5.5% and 7.2% decline on a quarter basis, respectively. When it comes to rents, Grade A is at USD $31.76 psm per month while Grade B is reported to be at USD $23.95 psm per month. ‘That slower slide in rents combined with significant drop in vacancy showed the first sign that the market is achieving a temporary equilibrium and rents are approaching the new bottom. Vacancy is also expected to continue to decrease, as there will no significant completions through the end of 2013’, said CBRE. Although the most common practice is to set up holiday homes in the city centre, investors should also consider checking the outskirts, which are close to public

transport hubs as well as to tourists attractions and landmarks.

Hanoi In Hanoi, there are certain areas that fit the bill as far as possible investment targets. Holidaymakers looking for a relaxing sanctuary after exhausting tours and activities in this vibrant city would be relaxing in places like Dong Da, Gia Lam, Hoan Kiem and Tay Ho. The Dong Da district has a potential to service a thriving holiday-rental market as it is not just home to the country’s most prominent Confucian temple, known as the Temple of Literature, but also it boasts a complete tourist orientated entertainment package such as villas, serviced apartments, schools, parks, shopping centres, restaurants, parks and hospitals. But for investors who do not want to stray far from Hanoi City central it may be worth inspecting the downtown areas around Hoan Kiem. This is by far the busiest commercial hub in the city and home to some of its most popular tourist spots, including the Old Quarter, Dong Xuan Market, Thang Long Water Puppets Theatre, Hanoi Opera House and the National Museum of Vietnamese History.

Ho Chi Minh City When it comes to Ho Chi Minh City, there are certain districts that would certainly

25


feature World charm and interesting architecture, not to mention sumptuous Vietnamese cuisine. Another prized Vietnamese treasure of the UNESCO World Heritage Site of Ha Long Bay located in the country’s northern coast, a collection of picturesque limestone karts scattered throughout the bay.

TO BE ENJOYED AT HOI AN BEACH RESORT:

Since Pho embodies the traditional Vietnamese cuisine, it is just fitting that it be enjoyed in the country’s historic town, Hoi An, which is located on the coast of the South China Sea in central Vietnam. This town is characterized by its ancient and peaceful vibe, which is not a surprise considering that UNESCO declared it a World Heritage Site in 1999. Not only does it boast a traditional Vietnamese culture but also an authentic eating experience which makes it a favourite tourist destination. Now to make your eating experience even better, breakfasting on a steaming bowl of flavorful pho noodles at Hoi An Beach Resort would be the perfect way. It’s not just the unique taste of pho noodles that you’d be able to enjoy but also the picturesque view of the famous Cua Dai Beach.

After decades of slump in the real estate market, Vietnam is well on its way to recovery with the help of positive legislation and stimulus measures introduced by the government in the recent years. Indeed, the government’s efforts are finally paying off as the country is now considered as one of the fast-emerging markets that are extremely attractive to foreign investors. It should also be noted that Vietnam is one of those countries that have strict directives in terms of foreign ownership. But just recently, the Minister of Construction proposed that foreigners be allowed to own property in an attempt to further boost the market. Experts and analysts consider the proposal extremely promising for the country’s market. Once the restrictions on foreign investors are relaxed; they will be encouraged to increase their investment further stimulating the property market.

FESTIVAL / DISH FOR YOUR BUCKET LIST: PHO - A popular street food and country’s national dish most commonly eaten for breakfast. This Vietnamese noodle soup is made from beef bones, ginger, onions, and different aromatic spices such as star anise, black cardamom, fennel seeds, coriander seed and cinnamon. Though the origin of Pho remains a hot topic for scholarly debate, the dish is undoubtedly the epitome of true Vietnamese cuisine.

26

A foreign investor may also invest in Vietnamese property by forming a company or a joint venture company with a local partner. However, the leading foreign estate agency in Vietnam, Chesterton, is offering a 50-year lease, which gives the buyer many of the rights of ownership.

GETTING IN PROPERTY BASICS AVERAGE PRICE

RENT PER MONTH

CURRENT PROPERTY TRENDS

In Vietnam, all land is collectively owned and regulated by the state. This means that no one – neither foreigners nor locals – may own land. However, the government has recently bared plans to amend regulations in order to create a more foreign-friendly investment clime in the country. However, as these amendments are yet to be put in place, buyers would still have to follow the old directives. Foreigners can buy a residence and lease the land from the government, and resident foreigners can purchase homes, but may not sublet them.

Most notably about the Vietnamese property market, however, is that the sales are conducted by the price of gold.

RENTAL YIELD

VIETNAM UP DATE

BUYING PROCESS

CAPITAL GAINS TAX

USD $1,230 psm

(prime apartments in Ho Chi Minh City and Hanoi)

N/A US$1,110

(usually a 120-sqm apartment in premier city centres)

25%

COUNTRY INFORMATION OFFICIAL NAME

Socialist Republic of Vietnam

CAPITAL CITY

Hanoi

CURRENCY

Dong (USD $1 = VND20,947)

LANGUAGE

Vietnamese

TOTAL AREA

331,210 sq km

POPULATION

91,519,289 (July 2012 estimate)

REGION

South-East Asia

TIME ZONES

UTC +7

DIALLING CODE

+84

GDP (Nominal; 2012 IMF estimate)

USD $137.681 billion

GDP PER CAPITA (Nominal; 2010–2011 IMF estimate)

USD $1,374

HUMAN DEVELOPMENT INDEX

0.617 (medium)

WHERE TO BUY Although the Vietnamese real estate market is yet to thrive and its infrastructure not as developed compared to more popular neighbor Thailand, the country has plenty to offer to anyone looking into a more long-term investment. Its beaches in Nha Trang and Da Nang are attracting huge crowds of foreign holiday-makers, as do the tropical islands of Cat Ba and Pu Quoc. Its two major cities, Ho Chi Minh and the capital Hanoi, are also appealing tourists because of their Old-

VISA REQUIREMENTS Citizens of ASEAN-member countries can visit Vietnam without a visa if planning on staying for 30 days or less. Nationals of South Korea, Japan, Russia, Norway, Sweden, Denmark and Finland do not require a visa if staying for less than 15 days. All other nationals must obtain a visa before departure or upon arrival. Passports must have at least 6 months’ validity, plus you will need two passport-sized photos and cash (US dollars) for the stamping fees. Visit www.vietnamembassy.vn for more information. AIRPORTS AND AIRLINES Serving almost 12 million passengers in 2011, Ho Chi Minh City’s Tan Son Nhat International Airport is Vietnam’s main international gateway. Flag carrier Vietnam Airlines (www. vietnamairlines. com) flies from here to many cities in the Asia–Pacific Region, including Bangkok, Jakarta, Kuala Lumpur, Melbourne, Sydney, Hong Kong, Seoul, Shanghai, Singapore, Taipei and Tokyo, and several cities in Europe, such as London, Paris, Frankfurt and Moscow. The airline also covers the majority of domestic routes in Vietnam. In addition, several airlines fly from their respective hubs to Ho Chi Minh City, which include Air China (Beijing), Aeroflot (Moscow), Air France (Paris- CDG), ANA (Tokyo-Narita), Cathay Pacific (Hong Kong), China Eastern (Shanghai-Pudong), China Southern (Guangzhou), Emirates (Dubai), Japan Airlines (Tokyo-Narita), Korean Air (Seoul), Lufthansa (Frankfurt), Malaysia Airlines (Kuala Lumpur), Philippine Airlines (Manila), Qatar Airways (Doha), Singapore Airlines (Singapore), Thai Airways Inter- national (Bangkok) and Turkish Air (Istanbul). Hanoi’s Noi Ban International Airport is the country’s major gateway in the north. Vietnam Airlines has regular scheduled flights from here to many cities across the world, including Bangkok, Beijing, Frankfurt, Hong Kong, Kuala Lumpur, London, Moscow, Paris, Seoul, Shanghai, Singapore and Tokyo. Furthermore, Aeroflot, China Southern, China Eastern, China Airlines, Japan Airlines, Korean Air, Malaysia Airlines, Qatar Airways, Thai Airways International and Singapore Airlines have regular flights to Hanoi from their respective hubs. Other regional, smaller airports serve Da Nang and Hue.

For more detailed guides, visit www.propertylife.asia/countryguides

© AVLXYZ / FLICKR

be extremely attractive to holidaymakers in search of possible vacation homes. District 1 is the usual resting hub for travellers because of the numerous accommodation options on offer. In fact, one of its streets, Phạm Ngũ Lão, is the main artery in the so called ‘backpacker district’. But what makes it popular to the travellers is that you can almost find everything here, ranging from markets, cafes, restaurants, to shops and souvenirs. In terms of luxury living, District 2 has it all. This once poor and run down district of Ho Chi Minh City is now one of the most sought-after residential areas for those who have a few million dongs to burn. In exchange, residents are given access to excellent facilities and amenities that are comparable to the best in the world — especially if they move into one of the many high-end apartments and villas in the area. District 7 features similar lifestyle amenities to those found in District 2. It also adds malls and a golf course to a mouth watering mix of swimming pools, tennis courts and schools as well as other amenities.


feature T

H

A

I

L

A

N

D

Soaring tourism numbers mean opportunity for buy-to-rent investors

I

In the June 2013 issue of Time magazine, the highly respected American publication named Thailand’s capital, Bangkok, as the most visited city in the world based on the 2013 Global Destination Cities Index. It was not the first time that the Southeast Asian nation was recognised for being a tourist magnet. Fact: tourism income accounts for a substantial share of the country’s gross domestic product. The monies from visitors and the associated spending generating an estimated 6.7% of GDP in 2007. Tourists are attracted to Thailand for various reasons, including numerous festivals celebrated throughout the year featuring the legendary lemon grass drenched, spicy and flavourful Thai food. This culinary magnet attracted at least 8.84 million foreign tourists for the first four months of 2013, according to data from the Tourism Authority of Thailand. To be fair, Thailand has a lot more to offer than incredible food, but for those interested in the culture of the country, immersing oneself in the flavours and colours of the foods which form the centerpieces of any celebration in the country is almost unavoidable.

28

THAILAND TEASERS The capital of Thailand, Bangkok is the most popular tourist city in the world. The meals that you will experience are certainly a contributing factor.

With such a large number of visitors coming in, Thailand requires accommodation of many different types in order to cope with the budgets of travellers from all levels of the social strata. Thailand delivers this choice with aplomb, from 5-star hotels to backpackers’ inns. Frequent tourists to Thailand, such as Singaporeans, have learned to get the most out of regular visits to the country by investing in buy-to-let properties that allow them the luxury of places to bed down during their stay and also allows them to maximize the value of their investments by leasing the property to other travellers at those times of the year when they are not resident in their vacation homes. The returns on these leases range from good to great, depending on the opulence and square meterage of the property concerned. Global Property Guide, in its April

30, 2013 report, estimated rental yields in Bangkok range from 3.97% to 7.41%. Another Global Property Guide report said that gross rental yield in Thailand is 6.29%, making it the third best in Asia, followed by the Philippines (7.06%) and Indonesia (7.05%).

R&R haven Among the first commercial tourists to Thailand (albeit involuntarily – as most were conscripts into the American forces fighting in Vietnam) were American soldiers in the 1960s who came to the country for rest and recreation. The fledgling tourist industry in Thailand was also given a boost by the fact that the newly launched Boeing 747 commercial jets had Bangkok as one of its first destinations. As a result, the number of international visitors dramatically rose from 336,000 foreign visitors and 54,000 R&R G.I.’s in 1967.to 22 million by 2012. In 2007, 14.5 million tourists visited the country and stayed an average of 9.19 days, during which time they spent a total of THB 547.782 billion (USD$17.69 billion), making Thailand the 18th most visited country, according to the World Tourism rankings.


© OPPOSITE PAGE: SUZULA / SXC; GENITORT / SXC

By 2008, Bangkok had taken third spot in Euromonitor International’s list of Top City Destinations, behind London and New York. Visitor numbers had grown to 10.2 million, while Pattaya was in 23rd place with 4.4 million tourists, Phuket in 31st spot with 3.34 million and Chang Mai in 76th place with 1.6 million tourists. The bulk of the tourists were Asians, mainly Japanese and Malaysians who together comprised 55% of the total in 2007. However, in 2011, the demographics changed as a large number of Chinese visitors began what was to be a growing Chinese infatuation (which is changing into a full blown love affair) with Thailand. From 1.17 million that year, their number went up to 2 million in 2012 and is expected to reach 3.3 million this year. Western visitors mostly come from the UK, Australia, German, the US and Scandinavia. The majority of them visit Thailand during the year-end holidays to escape the harsh winter in their home countries. The fact that Thailand’s tourism has a seamy side cannot be ignored. The country’s brothels have gained a global reputation and sex tourism certainly contributes to visitor numbers. There is also booming interest in medical tourism, including gender reassignment procedures that are far cheaper when compared to the specialist medical services provided in Western countries.

Amazing Thailand Thailand’s international marketing slogan is ‘Amazing Thailand’, and the numbers of visitors would indicate that there is widespread recognition that there is something special about the country that used to be known as the Kingdom of Siam. In fact

55% of visitors return for another dose of Thai hospitality. Thailand, after all, has 12 good reasons to lure tourists back to its shores. For every month of the year a uniquely Thai festival will amaze, educate and entertain tourists. Now dubbed a ‘Country of Festivals’, Thailand earned the moniker because Thais celebrate everything and anything under the sun (or moon) from the Birthday’s of the numerous members of the royal family – the Bhumibols – to its historical kings. In fact it seems that everyone gets a celebration to call their own, the smiling children of the country, teachers, the flora and fauna (including some fruit), the constitutions, elephants (of course – a really big celebration) as well as local celebrations and daily festivities too numerous to mention. The country even celebrates three New Years – the Chinese one in February, the Thai New Year every April 13 and the global New Year on Jan. 1. Besides these three New Year celebrations what are the other Thai festivals that bring tourists to the country? Here’s a run down of the major festivities. Chiang Mai Flower Festival Held at the start of the year, features beauty contests and floats parade Makha Bucha Day Held on the full moon of February when residents carry candles and walk in a clockwise direction Pattaya Festival Held in early April, marked by beauty parades, floral floats and fireworks THAI TOURISM JACKPOT 3.3 million tourists are expected to visit Thailand in 2013. There is certainly opportunity for the savvy investor to take a bite out of this market.

Royal Ploughing Ceremony Held in May to celebrate the country’s planting season Visakha Bucha Held during the May full moon to celebrate the birth, enlightenment and death of Buddha Rocket Festival Also held in May tin order to assure adequate rainfall Fruit Fairs Held in the provinces of Rayong, Chanthaburi, Chacchoengao and Hat Yai Asanha Bucha Day Celebrated on the July full moon to mark the anniversary of Buddha’s first sermon Queen’s Birthday/Mother’s Day Held every Aug. 14 Vegetarian Festival Held every October Loy Krathong Held in November, featuring floats seen on various bodies of water as homage to this vital liquid River Kwai Bridge Week Held between November and December King’s Birthday Held every Dec. 5.

Spicy food galore Of course, when there are festivities, there is naturally abundant food! And being food lovers the Thai’s take this part of the festivities extremely seriously. Recently a fourday Thai Food Festival at the Central World Square in Bangkok on June 13-16, 2013 saw thousands of ocals and international visitors tucking into various Thai and regional specialities. The festival featured the top 10 Thai street foods, including Moo Ping (grilled pork), KanomKrok (Thai coconut pudding), Cha Yen (Thai iced tea) and food

29


feature from 50 well known and award winning restaurants in the capital city. With CNNGo naming Bangkok as the world’s Best City for Street Food, the recently held Thai Food Festival certainly contributed to the organiser’s aim of making Thailand a world destination for foodies. Another unique festival in Thailand that draws in Chinese visitors is its annual Vegetarian Festival, held on the 9th lunar month of the Chinese calendar, which means it falls in either September or October each year. The 10-day festivities, which start the day before the new moon of the 9th lunar month, are celebrated throughout Thailand, especially in larger cities with Chinese migrant populations such as Bangkok’s Chinatown – also called Yaowarat – and Chang Mai (Warorot). Among the highlights of the Vegetarian Festival are the bringing of shrines or deities from homes to Chinese temples to receive spiritual energy, the hanging of lanterns inside and lighting of candles outside Chinese temples and the beating of drums inside and outside the temple to cleanse the area of evil spirits. These rites are held for spiritual and physical cleansing and include celebrants refraining from the consumption of meat, from engaging in sexual activities and consuming pungent spices such as onion and garlic. The celebrations are aimed at ensuring good fortune and creating a sense of inner peace.

Phuket – a resort city/province located on the Southwest coast of Thailand – has a separate Phuket Vegetarian Festival with an interesting back-story. In the early 1800s, Phuket was one of the trade hubs of China, India and other SouthEast Asian nations. Among the residents of this Thai province were Chinese immigrants who worked in tin mines and rubber plantations. In 1825, a travelling Chinese opera visited Phuket to entertain the migrant workers. Their visit coincided with one of the periodic malaria epidemics that struck the island. As the disease spread members of the opera also became ill. However, by sticking to a strict vegetarian diet, the opera members recovered, while many residents died from the ailment. The protection given by the gods against diseases is portrayed in the festival, whose central character is a mah song, a person – usually an unmarried and celibate male – possessed by a god and parades in the streets of Phuket while displaying the manifestations of the god’s power. The display includes walking across hot coals and exploding fireworks, bathing in hot oil, and the piercing of body parts with fish hooks, knives, razor blades and bamboo poles.

30

The deity is said to protect the mah song from pain and injury, and this is evidenced by the lack of bleeding or scarring despite the sharp instruments he uses on his body. Other Thai attractions that bring in tourists are the sport of muay thai or kick boxing, Buddhist shrines, the beaches of Phuket and Ko Chang, dive sites and night markets, plus of course the charming Thais themselves.

The wise traveller For most tourists, travel – whether it is for business or leisure – means being out of pocket to a greater or lesser extent. If you’re going to be spending your leisure time in a foreign country them the chances

are that a certain amount of spending is going to be inevitable. However, a growing number of travellers, including Singaporeans, reduce the financial burden of vacation time by purchasing buyto-let properties in popular tourist destination countries. This arrangement provides them a vacation house that assures them of accommodation even during peak travel seasons and rental income when they are back in their home countries or elsewhere. In addition rental income can either be plowed back into the property investment itself or used to diversify a portfolio - a prudent approach to investment in an increasingly challenging global financial environment. Thailand has been recognised as a great place to make investments work that little bit

© FROM TOP: UNSWORTG / SXC

A cure for malaria


harder. The almost continuous rise in the numbers of tourists arriving in the country, the country’s liberal laws when it comes to foreigners investing in property and the ease of doing business are all power incentives for investment. Thailand’s 1991 Condominium Act allows foreigners to own condo units, but payment must be transferred from outside Thailand, enter the country as foreign currency and be exchanged for baht, with specific instructions from the government that the money will be used to purchase a condo unit. A Foreign Exchange Transaction Form from a recipient bank must be completed for every transaction, which is then presented to the Land Department to register the condo unit. For those considering going into the purchase-to-let business, PropertyLife has identified some Thai investment hot spots for the purchase of holiday homes.

Bangkok Any capital city is a natural magnet for tourists because the government offices, central business district, key urban tourist spots and airports or seaports are usually located in the city or nearby areas. Bangkok is no exception to that general rule. This city of eight million people (make that 14 million if the residents of the greater Bangkok Metropolitan Region are included) is the doorway to Thailand. Spread over 1,568.7 square kilometres of land by the Chao Phraya River delta in Central Thailand, Bangkok or Krung Thep Maha Nakhon, has a long history of commerce, beginning as a small trading post in the 15th century during the Ayutthaya Kingdom. Bangkok is divided into 50 districts, further regrouped into 12 clusters. Potential buyto-let property investors would be advised to evaluate the major tourism hot spots, which are found in the Rattanakosin, Lumphini, Thonburi and Sanam Chai clusters. These four clusters are excellent areas to scout for buy-to-let properties since they form the backbone of Bangkok’s administrative, retail, cultural, business, commercial and industrial hubs. An immutable rule of thumb for above average rental yield is the importance of a good location, PropertyLife has listed the areas known for high rental yields, as recommended by local property experts. EasyHomes.tv, a property blog, identified the Noble Soho condominium as a good example of well-situated rental income producing units. These condos, in Thonglor has rental yields over 8% and capital gains have

exceeded 10% since the project was launched 3 years ago. A broader recommendation was to invest in a condominium at Sukhumvit, the most popular district of Bangkok. There’s a huge choice of investment properties due to the fact that the last 12 months have seen the development and completion of around 4,500 condominium units. Sukhumvit is also a pretty large chunk of greater Bangkok, so investors are really spoiled for choice as far as location is concerned. Besides Sukhumvit Road, the other suggested upscale residential areas are at Silon, Sathorn, Riverside, Rama III and Central Lumpini, while CBRE Thailand pointed to areas surrounding Lumpini Park, including Rajdamri, Oioenchit, Wireless Road and Langsuam as the prime downtown locations for condos. A mid-level condo unit costs THB 90,000 baht (USD$2,907) per square metre, while a high-end unit is priced at THB 115,000 baht (USD$3,714)/sqm. EasyHomes.tv estimated that Bangkok condos that were launched in the last 12 months offered investors a 10% capital gains return. One valuable tip for newbie investors is to look for smaller units, which provide the higher rental yields. That means condo units measuring from 60 to 100 sqm. The Global Property Guide said that a 50 sqm unit that rents for THB 30,707 baht (USD $988) a month has an average rental yield of 6.6% while a 120 sqm unit that rents for THB 64,180 baht (USD $2,065) yields 6.29% and a 350 sqm unit renting for THB 139,456 baht (USD $4,487) has a lower yield of 5.25%. CBRE Thailand noted the ‘large and continually growing expatriate population who look to rent condominiums’, which provide owners of these properties solid rental returns. The growth is not only in terms of expats seeking rental units, but also in the supply of apartments. From 1988 when the city’s condo market had less than 10,000 units, there are currently over 350,000 units available now and a continuous supply coming to the market. The growth in supply and demand has however been accompanied by a dramatic increase in prices. For instance the price of units at Somkid Gardens, one the first condo developments in Bangkok, increased to THB 250,000 baht (USD $8,053) per square metre from an initial THB 35,000 baht (USD $1,127) within 20

years.

Phuket For the many tourists who have spent any time in Thailand, the word beach is often synonymous with the name Phuket, which actually refers to both the province and the city situated off the west coast of Thailand in the Andaman Sea. Once a major trading route between India and China, Phuket now relies mainly on tourism for income. Besides its pristine beaches, Phuket offers diving and sailing opportunities, superb golf courses and a wide variety of local and international cuisine. Known for its beaches, Phuket was extensively damaged on Dec. 26, 2004 when it was struck by the tsunami caused by the now infamous Indian Ocean earthquake. However, by February 2005, most of the damaged resorts were back to business, indicating the resilient spirit of Phuket tourist-oriented establishments. The natural disaster did not deter thos interested in the above average returns made possible by booming tourist numbers from investing their money in the island paradise. And these are not just small-time local entrepreneurs but included Bangkok-based and publicly listed developers such as Sansiri and Supatai, which started to enter the market in late 2012. Their initial projects were entry-level communities with the successful launch of the Laguna Resorts & Hotels toward the end of 2012. Another project, the Laguna Shores, followed the trusted and true Bangkok market pattern of offering small unit sizes, beginning from 42 sqm, which had starting prices of THB 4 million baht (USD $128,750). In part as a result of extremely active buying activity on the part of foreign buyers, up to 47% of the units were sold in Q4 2012. More projects continued to be launched as sales related to new launches enjoyed early success. Among the current projects are the Baan Mai Khao by Sansin, a beachfront project launched in Q1 2013 and the Amari Residences Phuket, a hotel-services residence in a prime Phuket location overlooking Palong Bay. Property investors eyeing Phuket are advised to visit the numerous websites that focus on the island. For instance PhuketProperty. com just updated its listing which includes 2-bedroom villas in Chalong, Phuket that had prices ranging from THB 5.62 million baht (USD $180,900) to THB 8.9 million baht (USD $286,480). For those who may have just bought a buyto-let property and don’t have baseline indicating how much to charge tenants, a 1-bedroom

31


feature

apartment in Kemala rents for THB 30,000 baht (USD $966) a month and a 2-bedroom unit in Royal Phuket Marina rents for THB 80,000 baht (USD $2,575), while a 3-bedroom penthouse in Layan leases for THB 90,000 baht (USD $2,900) monthly. With the ‘how much’ part of the question settled, the other important thing is which parts of the island offer great value when purchasing buy-to-let properties? The website Phuketoceanvillas.com further subdivides the island into four zones and makes recommendations for each zone. So far, the portal has just tackled North West Phuket, located north of Patong, and listed seven beaches that are considered good places to look for property purchases. These are at Kamala, Surin, Bangtao, Layan, Naithon, Naiyang and Mai Khao Beaches. The website provides more information on each beach and why it is a good investment site, as well as providing individual rental yield figures and other valuable inputs that would help the foreign investor reach a decision where to purchase a buy-to-let property.

Pattaya Like Phuket, Pattaya is a beach city popular with tourists and expats. Located on the east coast of the Gulf of Thailand about 130 kilometres South-East of Bangkok, it has one of Asia’s largest beach resorts – the Pattaya Bay Area – and is the second most visited city in Thailand, next to Bangkok. The city’s beaches are near commercial areas that have restaurants, shopping centres, nightspots, high-rise condominiums, hotels, bungalow complexes and bars. Also known as the Thai Riviera, Pattaya has more than 30 internationalstandard golf courses designed by master players and designers such as Jack Nicklaus and Nick Faldo. Other leisure activi-

32

ties available include the more sedate options sedate such as lounging poolside amidst tropical greenery, meditating at Buddhist temples or fishing and sailing, while the more active types could indulge in go-kart races, horseback riding and shooting. Pattaya also has several offshore islands such as Ko Lam, Ko Sak and Ko Krok that also attract tourists and expats, further motivation to investigate purchase of property to service this growing group of consumers. The city has long attracted foreign investors and practically all the major international hotel players are present in Pattaya. But despite their presence, the problem of room shortage still persists during peak season – however as with most property investments aimed at garnering a steady rental income relying on seasonal income to keep payments ticking over may not be the best idea in the world, your investment needs to be paying dividends on a monthly basis. While Pattaya’s annual tourist numbers are comparable to those of the entire Costa del Sol in Spain, one advantage that this Thai vacation destination has over its Andalucian competitor is that it is summer here all year round, while Costa del Sol visitors could experience rains in March and April or snow in winter – enough to ruin the best-planned summer vacations of sun-seeking tourists. There is also the matter of lower costs since Thailand is located in Asia and the local currency trades at USD $1: THB 31 baht, providing more buying power to those holding foreign currency such as the mighty greenback and all powerful Euro. From the investor’s point of view, investing in Pattaya is a win-win situation since he or she may opt to use a short-term approach that relies solely on capital growth or a long-

ISLAND STYLE Exploring Thailand's many islands, large and small can be an especially rewarding experience. © STEFANEDBERG / FLICKR

term outlook that counts on two-digit rental yields to add to the property owner’s supplementary income. Similar to the situation in Bangkok, property investors in Pattaya are advised to look for smaller units, which are easier to lease and offer better rental yields. Studio units measuring 24 sqm would have a starting price of THB 1.3 million baht (USD $41,827), while a 34 sqm 1-bedroom apartment would often be priced a minimum of THB 2.54 million baht (USD $81,724). Rather than buy a property with a THB 5 million baht (USD $160,874) price tag, Pattaya.adventures.com recommends that the investor considers purchasing five THB 1 million (USD $32,175) properties and renting these out – makes sense, except from a property management point of view. We advise getting hold of a reputable property management company if you choose this route. Investors who want to know the best area to buy a property in Pattaya have four zones to select from, according to Pattayacondo.com. These are at Central Pattaya, Pratumnak Hill, Jomtien and Nakluea. Pattaya City is recommended for those who want to buy a mixed-used investment with high rental yields and a unit close to where the action is. Jomtien is for those who prefer neighbourhoods and stability over shopping malls and nightlife. NakluaWong Amat is for the beach lover and Pratummak Hill is for those who want to offer to tenants mid-range sea views since highrise condos are not allowed here. Studio condo units rent begins at THB 373 baht (USD $12) a night, 1-bedroom units with sea views costs THB 1,336 baht (USD 43), while 2-bedroom units would average THB 3,108 baht (USD $100) a night. Phuket research firm Raimon Land, which runs the website Why Invest… Phuket, said investors could expect solid yields and capital gains based on average rental yields in the island of 6% to 10%.


Wrapping up Number 13 The Telegraph lists Thailand as the 13th in its list of top 20 global cities for buy-to-let properties. Apichart Chutrakul, chief executive of the Sansiri Public Company Limited which is developing the Baan Mai Khao Ohuket beachfront condo targeted at Singaporean investors, pointed out the property prices in Thailand will remain very attractive by international standards. He added that compared to Singapore, prices of properties in Bangkok and Phuket are at least four times cheaper. In Orientexpat.com’s list of 15 best Asian cities to invest in buy-to-let properties, Bangkok was in sixth place. Leading the list was Jakarta, Indonesia, followed by Shanghai, China and Singapore. Australian, Malaysian, Taiwanese, Philippine, Japanese and South Korean cities were also included in the roster. Meanwhile, Property Wire quoted Knight Frank’s latest Prime Global Cities Index that cited Bangkok for recording annual property price growth of 26.1% in the first quarter of 2013, making it second on an elite list of eight cities that logged double-digit price growth for Q1 2013. Knight Frank pointed out that cooling measures aimed at residential units in Bangkok and Jakarta (which topped the list with a 38.1% growth) are less stringent compared to their counterparts in other parts of Asia, in the process allowing middle-class wealth to fuel demand and push prime prices higher. Kate Everett-Allen, head of international residential research of Knight Frank, stressed that the first quarter usually yields the weakest growth rate for property prices for the year. ‘We expect stronger growth to emerge in the second quarter as buyers continue to search for luxury bricks and mortar as a way of sheltering their assets from the Eurozone’s continuing turmoil and the fragile global economy’, said Everett-Allen.

FESTIVAL / DISH FOR YOUR BUCKET LIST: MOO PING -It’s actually pork barbeque, Thai style. However, what makes this favourite dish different from the standard grilled pork on stick is that Thais have a certain way of threading it on skewers and selecting the best cut as well as the marinade used. It includes ground pepper, garlic, chopped cilantro roots, soy sauce, oyster sauce, coconut cream, sugar, corn flour, baking powder and vegetable oil. Moo Ping is a popular breakfast fare for people on the go and is usually served with glutinous rice and dipping sauce.

TO BE ENJOYED AT KOH PHI PHI LEH ISLAND: Moo Ping can be enjoyed at any time of the day, while lounging on the white sand beach of Phi Phi Leh, an uninhabited island 1.5 kilometres off the southernmost tip of Phi Phi Don in Palong Bay. Picture yourself savouring Moo Ping along with a tropical drink or margarita, while enjoying the stunning vistas of vertical cliffs capped with green foliage that merges with sandy beaches and tropical coral seas.

PROPERTY BASICS AVERAGE PRICE

USD $3,300 psm (usually a 120-sqm apartment in premier city centres)

RENTAL YIELD

5.55–10.15%

RENT PER MONTH

USD $2,413 (usually a 120-sqm apartment in premier city centres)

CAPITAL GAINS TAX

37%

COUNTRY INFORMATION OFFICIAL NAME

Kingdom of Thailand

CAPITAL CITY

Bangkok

CURRENCY

Baht (US$1 = THB29.36)

LANGUAGE

Thai

TOTAL AREA

513,120 sq km

POPULATION

67,091,089 (July 2012 estimate)

REGION

South-East Asia

TIME ZONES

UTC +7

DIALLING CODE

+66

GDP (Nominal; 2012 IMF estimate)

USD $376.9 billion

GDP PER CAPITA (Nominal; 2010–2011 IMF estimate)

USD $5,395

HUMAN DEVELOPMENT INDEX

0.682 (medium)

WHERE TO BUY

THAILAND UPDATE CURRENT PROPERTY TRENDS

Property Wire reports that the continued increase in tourist arrivals in Thailand will translate into a boost in demand for condos from overseas buyers. In particular, the influx of property purchasers would focus on popular destinations Phuket and Pattaya.

Foreigners looking to get a piece of Thai property tend to choose either the bustling capital of Bangkok, the island-resorts in the south (Phuket and Ko Samui), resort cities along the coast (Pattaya and Hua Hin), or the idyllic Chiang Mai in the north.

BUYING PROCESS Negotiations in property purchase are usually handled by an estate agent. He or she will look into all the items included in the sale and any issues relating to leaseholds. The buyer should also hire a law firm to carry out a comprehensive title search and land

For more detailed guides, visit www.propertylife.asia/countryguides

survey. This is to ensure that the person selling has the title to both the property and the land on which it sits. If you are purchasing a condo, then the title report should tell you if there are any outstanding fees on the property. An engineer’s inspection is recommended to ensure that the property is structurally sound and that the electrical and plumbing systems are in good working order. This inspection can help with the negotiations as if there are problems the seller can be asked to correct them before the sale is completed. The contract when you are purchasing a property will be drawn up either by the agent or the seller or even the purchaser, and this is signed by all parties once an agreement to purchase has been reached. The deposit is paid when this stage is reached. There is no law that states that the documentation needs to be notarised, but any copies of the documentation need to be signed to show that they are true copies of the original. Anyone who is named on the documentation needs to sign it and it should show everything that is included with the sale. A final check at the property is required before the seller and buyer meet up to sign all the documentation. This is usually done at the real estate office or at a lawyer’s office. If the purchaser is obtaining a mortgage then there will also be a requirement to provide documentation from the bank as the land title will be put in the bank’s name.

GETTING IN VISA REQUIREMENTS Thailand grants visa on arrival for citizens of 49 countries, including ASEAN members, Australia, the USA, the UK, and Canada, among others, for stay of up to 30 days. In addition, citizens of China, India, Saudi Arabia, and Taiwan, among others are granted visa-on-arrival for stay of 15 days for THB1,000. For more a complete list of countries, visit thailand. visahq.com. All travellers will need a passport valid for at least 90 days and has adequate unused visa pages. AIRPORTS AND AIRLINES Thailand’s main point of entry is Bangkok’s Suvarnabhumi Airport. Handling 47.9 million passengers in 2011, the airport is the sixth busiest in Asia. It is the hub of the country’s flag carrier Thai Airways International, where it has regular scheduled flights to 75 destinations in 35 countries. Other carriers that operate from the airport are Bangkok Airways and Orient Thai Airlines. Numerous airlines fly from their respective hubs to the airport, including Aeroflot (Moscow), Air China (Beijing), Air France (Paris), British Airways (London), Cathay Pacific (Hong Kong), China Airlines (Taipei), Emirates (Dubai), Garuda Indonesia (Jakarta), and KLM (Amsterdam), among others. Visit www.suvarnabhumiairport.com/detail_airline_ information_en.php for more details. Bangkok’s older airport, Don Mueang International, was reopened in 2007 after a major facelift. The airport now serves a number of low-cost carriers, including AirAsia and its subsidiaries Thai AirAsia and Indonesia AirAsia, which have regular scheduled flights to Kuala Lumpur, Jakarta, Denpasar (Bali), Bangalore, Chennai, Ho Chi Minh, Hong Kong, and Macau, among others. For more information, visit www.airportthai. co.th/ewtadmin85_AOT/ewt/donmueang/main. php?filename=index___EN Thailand’s second busiest airport is Phuket International, which serves the tourist island of Phuket. Numerous airlines have regular scheduled flights from their respective hubs, including Aeroflot (Moscow), Air China (Beijing), China Airlines (Taipei), China Eastern (Shanghai), China Southern (Guangzhou), Dragonair (Hong Kong, and SilkAir (Singapore), among others.

33


feature

OCTOBER窶年OVEMBER 2013

T H E B E S T P L A C E S T O E AT, D R I N K , L I V E , L O V E A N D I N V E S T

C A R I B B E A N

Barbados!

A

s one of the most popular tourist destinations in the Caribbean, this tiny sovereign island is famous for its beautiful beaches, replete with golden sunshine, crystal-blue water, and soft, powdery sand. Here, a person can spend the whole day relaxing, just sipping rum and listening to calypso music. There is a saying that although easy living was not invented in Barbados, it was perfected here.

The Perfect Climate for Real Estate Investment For several reasons, Barbados is an attractive option for real estate investors looking to focus on to let properties as a strategy for creating a steady cash flow. The first aspect would be the tourism itself. Thousands of travelers visit the country each year to enjoy the mild,

34

warm climate and experience the festive culture. There is always a need for shortterm tourist accommodations. In a survey compiled by the World Economic Forum, Barbados ranked first among all Caribbean and Latin American region countries in regards to the overall environment provided to tourists. Countries were evaluated in multiple categories, including both natural and cultural resources, security, safety, health, hygiene, environmental laws, infrastructure, and the priority tourism is given by the government. The second reason would be the political and social environment existent in Barbados. The government is democratic and stable. The economy is robust and the crime rate is low. Because Barbados was originally inhabited by the British, English is the official language and its legal system is based on British Common Law.

The third reason would be government commitment to business. Buyers and developers are strongly encouraged in their efforts with significant financial incentives and tax concessions. For example, the Tourism Development Act accelerates tax write-offs for projects that have been approved. In 2007, the Property Transfer tax rate was reduced from 7.5% to only 2.5%. Barbados also has no capital gains tax. With a certificate from the Barbados Tourism Authority, hotels can realise a tax rebate of 50%, and villas can receive 25%.

Festivals for Food and Fun Barbados has a rich cultural heritage and the people have a wonderful penchant for enjoying life. The Bajan people honor their past with heritage festivals and traditional music, and they welcome the present and future with events celebrating international haute cuisine and modern musical styles.

ツゥ TOP: RADIOEDIT / FLICKR; PPOSITE PAGE: DAN COSTIN / FLICKR

Welcome to

BUY BARBADOS Robust tourism numbers have remained steady in the face of the economic downturn meaning that Barbados offers excellent property investment potential.


Oistins Fish Festival, Easter Weekend One of the more unique events in Barbados is an annual festival that both honors Oistins Town as a major fishing community and also commemorates the signing of the Charter of Barbados. Since 1977, the schedule has striven to promote the fishing industry by focusing on events involving fish and seafood. Some of the popular events are crab races, boat races, and a greased pole-climbing contest. A traditional fishing industry skill is preserved in the fish-boning competition. Other entertainment is provided by local steel-pan and tuk bands. The culinary highlight of the festival is the “Taste of the Caribbean” event, where chefs from different countries in the region are invited to showcase the cuisine of their nation by creating dishes that highlight different types of seafood.

Crop Over, late May to early August Only in this island paradise can a party be extended for over two months. Originally called “Harvest Home” and celebrated more than three hundred years ago, Crop Over has its roots in the era when Barbados was the largest sugar producer in the world. At the conclusion of a successful sugar cane harvest, workers would begin a massive jubilee of singing, dancing, music, games, feasting, and drinking competitions. Crop Over was celebrated continuously for almost three hundred years, until World War II affected sugar production and the overall economy in Barbados and the festival was disbanded. Revived in 1974, Crop Over is now the biggest national festival in the country, with an overall atmosphere rivaling Carnival in Brazil or Trinidad. The festival starts with the Opening Gala, where the key events are the ceremonial Delivery of the Last Canes is performed, and then a King and Queen of the Festival are crowned. Usually, the honorees have been the most productive sugar cane cutters, male and female, of the season. Although calypso and soca music are omnipresent during the festival, there are traditional two large music events held during Crop Over. The first is Pic-O-DeCrop, a calypso concert and competition.

Entrants vie for the very coveted title of Pic-O-De-Crop Monarch, and are judged not only for their singing, but also for their overall presentation. The second major musical event of Crop Over is Cohobblopot, usually held the last weekend of the Crop Over season. The name comes from a slave word meaning “a stew with a variety of ingredients”, and that is a perfect description for the Cohobblopot event. Calypso performers and soca musicians share the stage with dancers in extravagant, brightly colored costumes as they perform before packed audiences. Another Crop Over highlight is the Bridgetown Market Street Fair, in which hundreds of vendors of all kinds offer their food and wares to revelers. The streets are thronged with locals and tourists alike, all intent of shopping and eating and drinking more than their fill. Calypso, soca, and reggae music from local bands is played continuously. For audiophiles, a musical style worthy of notice is souge music, which is indigenous to Barbados. Souge is a mélange of other Caribbean musical styles, including calypso, ska, reggae, and soka, all mixed together in such a way to produce a whole that is better than the sum of its parts. One Bajan food that must be tried during the festival is fried or steamed flying fish with cou-cou, served in combination as the national dish of Barbados.

Cou-cou is a mixture of corn flour and okra that reflects the African roots of the slaves who were originally brought to Barbados to work on the sugar plantations. The dish is such an ingrained tradition on the island that there are even prescribed cooking implements. No self-respecting cook would prepare cou-cou with anything other than a specific wooden utensil known only as a “cou-cou stick”. For something quicker from a vendor, a traveler may ask for a cutter, a type of Barbadian sandwich. Made on Bajan Salt Bread and filled with different savory meat, fish, or cheese choices and then slathered with Barbadian Pepper Sauce, it is a common offering at rum shops across the country. The Crop Over festival concludes and climaxes with Kadooment Day, recognized as a national holiday. Kadooment comes from the Bajan word meaning “a big to-do or ruckus”, which creates an apt mental picture of this magnificent street carnival. It begins in the wee hours with the Foreday Morning Jump-Up, in which thousands of revelers, both locals and tourists, cover themselves in mud and body paint and make their way on foot along the route from Bridgetown to Spring Garden Highway. Because this is an officially recognized holiday event, the Royal Barbados Police Force is present along the way, ensuring public safety. Later, costumed masquerade, or “mas”, bands create pulsating Bajan rhythms while wearing elaborate traditional costumes.

35


feature

Barbados Food and Wine and Rum Festival, November Knowledgeable food enthusiasts consider this annual festival to be the can’t-miss culinary event of the year. It starts with the food. Six internationally recognized chefs are invited to both prepare their signature dishes and also work with the finest local dining establishments to create singular menus capable of pleasing even the most discriminating palates. Over the course of four engaging days, attendees will garner special personal access to the invited chefs. Each celebrity chef will hold exclusive cooking demonstrations, sharing their kitchen secrets with the audience. Those present will also have the chance to buy the chef ’s newest cookbook and have it personally autographed. It continues with the wine. Holding several demonstrations during the course of the festival, a world-renowned sommelier and wine expert will take the audience far beyond the differences between white and red wine. This celebrity expert will educate attendees about all things wine, from the importance of the right grapes, to tasting methods, to how to pair the right wine with the right meal for maximum enjoyment. It is completed by the rum. No culinary event in Barbados would successful without the inclusion of the most famous beverage on the island. This year, the festival is honored to welcome the Rum Ambassador from Mount Gay Rum, the oldest and most prestigious brand of rum on the planet. Mount Gay Rum has been

36

KEEP IT SIMPLE A combination of a laid back attitude and attractive incentives for investment mean that Barbados is open for business.

distilling its distinctive rum in Barbados since 1703. Among the events during the festival is a seminar on how to make the perfect Rum Punch, which is widely considered to be the national drink of Barbados. The most family-friendly part of the FWR is the Sunday Bajan Fiesta, in which eight food stations are set up and local cuisine is offered up buffet-style. For the children, a special kid’s zone is available, including a station where they can create their own culinary concoctions by decorating their own cake and ice cream. On the final day of the FWR Festival, there is a treat for the adults. Those in attendance can take a special tour of the Mount Gay Distillery located in St. Lucy, and hear the story of “the rum that invented rum.” Visitors will be able to sample different blends from among what is called the finest rum in the world. Barbados has achieved what is impossible for most locales. It is a an updated, modern country with progressive laws and a receptive attitude concerning new business ventures; yet, at the same time it is a refreshing respite from the stresses and demands of modern life. A personal journey here is an escape from the maddening rush of the outside world, while a business proposal here is received with open arms.

A Few Words About Rum The history of rum is intimately intertwined with the history of Barbados, and therefore, rum is an integral part of Bajan culture. Although fermented sugarcane drinks can be traced back to ancient Asia, most likely China or India, the first distilled true rum came from 17th century Barbados. Slaves working on the sugar plantations discovered that molasses, which is created during the sugar refining process, could be fermented into alcohol. Later, it was discovered that distillation would remove impurities and concentrate both the taste and the alcoholic content. The first true rums were created. Rum is so identified with Bajan culture that it is often referred to as “Barbados water”. One of the best examples of its presence in everyday life is the ubiquitous rum shop. At its simplest, a rum shop is merely a small building or hut where a thirsty patron can stop in for a beer, or more likely, a flask of rum. At the heart, however, rum shops are the social and cultural hubs of everyday life in Barbados, places to grab a rum punch and a

© FROM TOP LEFT: WWW.WORTHTHEWHISK.COM, DAN COSTIN, BEN RAMIREZ / FLICKR

Acts try to outdo each other to claim the title Designer of the Year. The denouement arrives with a thrilling fireworks display.


cutter, engage in lively conversation, and share news of the day. One of the most interesting things about rum in Barbados is the fact that there are over 1500 rum shops in the country, even though the entire island only spans a mere 430 square kilometers. The national cocktail of Barbados is the ever-present rum punch. Here is the recipe for a traditional rum punch, according to Chesterfield Browne, Rum Ambassador for Mount Gay Rum. This is a man who travels 255 days a year spreading the word about his company’s product, and everywhere he goes, he has a completely-equipped travelling bar kit at his side. 2 oz Mount Gay Eclipse rum 3/4 oz fresh-squeezed lime juice 3/4 oz fresh-squeezed lemon juice 2 oz simple syrup (see below) 3 dashes Angostura bitters 3 drops Grenadine Sprinkle nutmeg, freshly grated Cherry garnish

Mix all ingredients (except nutmeg and the garnish) with ice, then strain into an ice-packed red wine glass. Garnish with a sprinkle of nutmeg and a cherry. Simple syrup 1 cup brown sugar 1 cup water

In a saucepan, heat water and sugar over low heat until sugar is dissolved. Cool, portion, label and refrigerate for up to two months.

BARBADOS UP DATE CURRENT PROPERTY TRENDS Barbados’s property market is still considered stable, but its real estate prices have not yet recovered from the 15% to 25% loss incurred during the global financial crisis. Some property experts said the crisis just corrected the overvalued prices of properties in Barbados. Even if there were price drops, the country’s real estate market continues to attract buyers because of its resiliency when compared to other Caribbean markets. While prices went down 10% to 15% in some parts of Barbados, beachfront home prices fell by just an average of 5%, and in some parts, there were no price decline because of their prime locations.

FESTIVAL / DISH FOR YOUR BUCKET LIST: COU-COU AND FLYING FISH - This dish is made up mainly of cornmeal (or corn flour) and okra, both very inexpensive ingredients available at supermarkets and fresh produce markets. Cou-cou was a regular meal for slaves who were brought over from Africa to Barbados. To cook this, you need a cou-cou stick made of wood and with a long, flat rectangular-shaped head, measuring one foot long, to help create its firm texture. Cou-cou is often a side dish to the Flying Fish, which is cooked either fried or steamed. The two are considered Barbados’s national dish.

TO BE ENJOYED AT A BEACHFRONT PROPERTY IN ST. JAMES:

Cou-cou and the Flying fish are best enjoyed while vacationing in a beachfront property in St. James, known as the playground of the rich and famous, and the haven of sun-starved tourists.

PROPERTY BASICS AVERAGE PRICE

USD $4,189

RENTAL YIELD

N/A

RENT PER MONTH

N/A

CAPITAL GAINS TAX

N/A

COUNTRY INFORMATION OFFICIAL NAME

Barbados

CAPITAL CITY

Bridgetown

CURRENCY

Barbadian dollar

LANGUAGE

English, Bajan

TOTAL AREA

431 sq km

POPULATION

274,200

TIME ZONES

Eastern Caribbean (UTC-4) Summer (DST) not observed (UTC-4)

DIALLING CODE

+1 -246

GDP (Nominal; 2012 IMF estimate)

USD $4.490 billion

GDP PER CAPITA (Nominal; 2010–2011 IMF estimate)

USD $16,151

HUMAN DEVELOPMENT INDEX

0.825 (very high)

the fun, party crowd type of person. The area features lively bars, windsurf hops and reggae buses headed for Oistins on Friday night for the fish fry. SOURCE APLACEINTHESUN.COM

BUYING PROCESS Barbados has no restriction on foreign ownership of property, but non-residents must get permission from the country’s central bank to purchase property. Failure to follow this pro forma requirement would void the purchase. The first step is to register all money brought into Barbados. Hire a lawyer to assist you in this procedure and for the purchase transaction. Upon reaching a price agreement, the buyer and the vendor will sign a contract prepared by the seller’s lawyer, and then the buyer will pay a 10% deposit that is held in escrow by the vendor’s attorney until the transaction is completed with the payment of the balance and passing of the title to the buyer through conveyance. A Barbadian attorney will search the register and establish the title to the property before the sale is completed. From signing the contract until the completion of the transaction, the legal representative of the buyer will search the title and ensure there are no encumbrances, charges, encroachments and other impediments to the sale. Such a procedure takes two to three months. The final step is for the vendor to pay the transfer taxes and government stamp duty. SOURCE GLOBAL PROPERTY GUIDE

GETTING IN VISA REQUIREMENTS To enter Barbados, a valid passport and valid return ticket is required, including all North American citizens. To apply for a visa, complete the application form in duplicate, accompanied by two (2) passport size photos. Pay the fee of BBD $200 (USD $100) for a single entry visa and BBD $400 (USD $200) for a multiple entry visa, which could be obtained from any Barbados Missions and consulates overseas. But for passengers of cruise ships, visas are not required, except citizens of the C.I.S., Eastern European countries, People’s Republic of China, Taiwan, South Africa and Korea. SOURCE BARBADOS.ORG

AIRPORTS AND AIRLINES There are nine airlines with connecting flights to Barbados. These are: Air Canada – www.aircanada.com

WHERE TO BUY

American/American Eagle – www.aa.com

The ideal places to buy properties in Barbados are on the west coast where the Caribbean beaches are found. The area is lined with palm and pine trees, and features the curious combination of multi-million dollar houses and traditional small, wooden chattel houses.

BMI – www.flybmi.com

Among the suggested hotspots are:

US Airways – www.usairways.com

Sandy Lane – Described as uber luxurious and the top choice for people with lots of money.

Virgin Atlantic – www.virgin-atlanticcom

Royal Westmoreland – For those who prefer a sea view and looking for homes for sale, slightly cheaper than those in Sandy Lane, this is the place to look for properties from expensive villas to apartments costing USD $429,000.

There is only one airport in Barbados, the Grantley Adams International (Code: BGI). It is found in the South-East of the island, about 13 kilometres from Bridgetown.

South Coast – A place to buy if you are young and

For more detailed guides, visit www.propertylife.asia/countryguides

British Airways – www.britishairways.com Caribbean Airlines – www.caribbean-airlines.com Delta – www.delta.com LIAT – www.liat.com

Xl – www.xl.com

SOURCE LONELY PLANET

37


feature

M E X I C O

Ariba! Ariba!

Emerging market real estate favourite Mexico full of fiesta fun all year long

I

f there’s one thing every traveller to the land of the Chipotle and chocolate covered steak (Mole poblano contains about 20 ingredients, including chili peppers and chocolate) can agree on it’s that Mexico is worth the trip. Whether you want to stretch out on pristine white sands, explore ancient archaeological sites, take an afternoon stroll in La Colonia Roma and Lake Chapala, or do some bar-hopping in La Condesa, Mexico has just about everything for everyone, all the time. Mexico is a year round fiesta destination, and there are times when even the most world-weary traveller is greeted by some of the greatest festival action on the face of the planet. Indeed, this country knows just how to soothe the shattered psyches of travel-

38

lers seeking a respite from the hectic urban schedules of the rat race. Given Mexico’s well-earned reputation for fun in the sun, it’s hardly surprising that according to the World Tourism Organisation the country is ranked as the 13th most visited destination in the world, as at 2012. Given the reputation of Mexico as a party state it’s no surprise that the number of tourist arriving at various inland and coastal cities in this, the most populous Spanish speaking country in the world, is steadily growing each year. In the most recent report from the Mexican National Migration Institute, it was shown that visitor numbers for the first five months of 2013 increased by 7.5% compared to the same period last year. Which means that 5,237,035 visitors pre-

ferred to spend their holidays in this lively, culturally diverse and sun-kissed Latin American country rather than in any other places in the Americas. Given the huge numbers of tourist arrivals every year, the industry is an essential driver of the Mexican economy. To give you an idea of the scale of the Mexican tourism industry - the country is 23rd on the list of top tourism earners around the world. But it’s not just the sparkling white shorelines, ancient landmarks, nor the vibrant nightlife that makes Mexico one of the most sought-after holiday destinations on the globe. Regional cuisines and culture are both major drawcards. Rarely will you encounter tourists who are not the least fascinated with the Mexican’s vibrant culture and not enticed by the rich aromas and

© WILLIAM NEUHEISEL / FLICKR

Hot as a Habenero, Mexico keeps attracting property investors. BY JONALYN FORTUNO


vibrant colours of the country’s signature dishes. A heads up for first time visitors to Mexico: Mexico will first shock your taste buds and may (heaven forbid) make you think twide about, or even give up on the local cuisine before you’ve really had the chance to get under the culinary skin of this fabulous country. Mexico is after all a haven for food-lovers and not eating any of the Mexican specialties is like skipping pasta when in Italy or refusing a fine Champaign in France. And what specialties they are. Mexican cuisine is not limited to standard Westernised fast food interpretations, pilfered from the country's extensive menu. We are not simply referring to tacos, enchiladas and tortillas. There are a such a dizzying number of food offerings and alternatives that even listing them would be beyond the scope of this article, or even this magazine. The choice of food offerings is a clear indication of how creatively the local culinary experts have taken the proud traditions of Mexican food and infused them with new life. It’s said that where food is concerned expect the unexpected in Mexico, at least in terms of new experiences for pallettes that are more used to bland, workaday flavours and processed, mass produced food. If you’re a fan of fresh ingredients, spicy heat and flavour filled food, then Mexico is simply going to change your life.

Here’s an example. If you think that Cancun is just for American youth to throw caution and good sense to the wind when on Spring Break, think again. How about a platter featuring Pescado a la Tikin-Xic, fish prepared with annatto, sour orange, peppers, tomatoes, red onions, and spices? This fish is usually grilled over charcoal, wrapped in banana leaf, and bathed in beer and olive oil. If that description doesn’t leave you imagining the pungent smells of charcoal, seared fish and peppers and hearing the whisper a crackling fire with the surf in the background then you’re probably not ready for a Mexican culinary experience - and there's no shortage of volunteers to take your place at the PropertyLife offices.. Mexico’s unofficial Cuisine Ambassadress, Patricia Quintana, hits the nail on the head: ‘Mexico offers innumerable riches for tourism, but beyond the beaches, the archeological sites and the ecotourism, there’s the cuisine, which should be known throughout the world, providing magnificent opportunities for visitors’.

Mexican cuisine reflects the country’s culture Mexican cuisine is not just notable for its rich and bold flavor, but also for its huge influence on the global food scene. Most menus around the world contain at least a couple of traditional Mexican dishes, which elevate the country’s profile and reputation when it comes to gastronomical delights. There can be no question about it, Mexican cuisine is simply a whole lot of flavor and a whole lot of fun. Such popularity did not go unnoticed by UNESCO. In 2010, Mexican cuisine was finally listed as a Cultural Intangible Heritage, thanks to its historical roots, which can be traced back to the Aztec and Mayan period. BBC quoted UNESCO as saying that ‘traditional Mexican cuisine is a cultural and comprehensive model comprising farming, ritual practices, age-old skills, culinary techniques, ancestral community customs and manners’. It seems that the Mayans and Aztecs did not only make a significant contribution to advanced time keeping and measurement systems like the famous Mayan Calendar, but they were also responsible for establishing the foundations of Mexican culinary excellence through the culti-

vation of crops, grains and vegetables around 9,000 years ago. As early as 7000 BCE, the indigenous people of the region were already as creative as they were intellectually advanced. Their historical reputation for innovation is well earned not only based on the advanced nature of the calendars and the mathematics they invented, but also to the dishes that they cooked and the preparation of a wide variety of ingredients. With the proper boiling, grinding and kneading Aztecs could turn maize (corn) into tortillas, tamales, and even bread. It’s also thanks to them that chocolates and bubble gum were discovered. Besides maize, the Aztecs could also transform fresh water fish, crickets, ants, axolotl salamanders, worms, and gophers into a meal, but a meal fit only for commoners. Archeological discoveries indicate that Aztec nobility consumed much fancier faire, including dog, turkey, venison, wild game and dried fish. The nobles and royalty were also able to enjoy a cup of cacao , unlike commoners who we assume would have to settle for tepid water to send them off to sleep as the evening's drew in. Evidence would indicate that Mayans were fabulously resourceful as they were able to develop different strategies to properly cultivate their food supply. Just like the Aztecs, the Mayan diet is generally supposed to have centered on maize, with the addition of squash, beans and chili peppers. But unlike the former, Mayans were not overly fond of exotic dishes like bugs and insects. Their overall diet comprised mostly fruits and crops cultivated in the Mayan forest gardens known as pet kot. Just as the Mayans and Aztecs established the foundations of traditional cuisine, the bloody invasion of the Spanish conquistadors in the 15th century provided elements of Spanish cuisine that many believe enriched Mexican cuisine. Initially, the Spaniards tried to force their own diet which include rice, beef, pork, chicken, wine, garlic and onions on the local inhabitants, Although their attempt at wholesale social and gastronomic re-engineering was was doomed to failure, the native inhabitants of the region assimilated many Spanish cooking techniques and ingredients. Today we have quesadillas, burrito, guacamole, escabeche (tangy marinade) and other dishes which bear the stamp of Spanish influence. The French also contributed to the country’s cuisine, with typically delicious results.

39


feature

A Food festival for Every Taste Mexicans make their food the central theme in every festivity, honouring their traditional cuisine and its contribution to those cultures that have molded Mexico into one vibrant nation. Food festivals are also the Mexican’s way of giving thanks to Mother Nature for the bountiful harvests she provides during the growing season. The tourist on a gastronomic journey can therefore expect various dishes consisting of regional delicacies, and

traditional cooking to tantalise every sense during the fascinating festivals happening across the country at various times. The word lively does not even begin to describe the atmosphere during Mexico’s food festivals. The parades of colorful costumes, street theater, music and dazzling fireworks only serve to whet the appetite for all things food related. And because we believe that property investment is today not only a matter of dollars and cents, but is rather influenced strongly by softer issues such as the quality of life one can enjoy in various hot property markets, PropertyLife has developed a list of best food festivals and Mexican fare. This list will inform, guide and enliven any trip to this fascinating country.

Three Kings Festival (Mexico City) Celebrated every 6th of January. This event is characterised by Rosca de los Reyes (King’s Loaf), which takes the form of a round doughnut-like cake with a little plastic doll stuffed inside. As per tradition, anyone who gets a slice that contains the little doll is obliged to hold a party on Dia de la Candelaria in the following month.

Feria Nacional del Mole A mouth-watering event in which moles and other sauces are prepared for sampling and competition. Just a little advice though, don’t go booth hopping unless you're comfortable with the idea of miss-

ing out on layers and layers of complex cuisine. The endless variety of mole samples are simply too irresistible. This celebration is held between October 1 and 15, so better clear your calendar.

National Wine and Cheese Fair

(Tequisquiapan, Queretaro) If you think that the best wines and cheeses in the world are found in France, you’re in for a big surprise. If you love cheese and wine then a visit to this charming little Bajio town between late May and the first week of June is probably one of the best decisions you will ever make. This is a rare occasion when some of the best wineries in town converge and showcase their wares. Besides cheese and wine, your gastronomic curiosity will be rewarded with various other gourmet treats which are especially prepared for the occasion.

Vanilla Festival (Papantla, Veracruz) For those who like vanilla, heaven on Earth must be Papantla in Vercruz. This town can be found in a world renowned vanilla-growing region of Mexico and this festival, held every 30th of May showcases a menu based on the town's signature product. But it’s not just the vanilla-flavoured pastries and ice cream that makes this an exciting event. Visitors are also treated to folk dances and heart-stopping acrobatic performances in the Dance of the Voladares, all of which help build an appetite for the treats available from the booths lining the streets.

NACHOS AND TORTILLAS THE TIP OF THE CULINERY ICEBERG Fresh nachos are a delight to the senses and home made tortillas can cause a palace revolt amongst your tastebuds. But delving deeper into the Mexican culinery scene reveals some of the most refined tastes on the face of the planet.

40

© FROM LEFT: MANOFTASTE.DE; PEDRO SANCHEZ / WIKIMEDIA COMMONS

According to Mexconnect, the fusion of French and Mexican ingredients ‘made an excellent gastronomic pairing.’ Try tasting bolillos (cristy oven baked rolls) or mousse de aguacate (Avocado Mousse) and prepare to become a convert to a Mexican / French fusion of tastes. Mexican cuisine is the result of deep roots in ancient cultures and civilisations as well as contributions from invaders from nations across across the globe. It is a story of assimilation and acclimatisation. The result is a delicious mixture of tastes that runs a gamut from hot and spicy to cooling and refreshing. Mexico’s cuisine has been able to retain the vestiges of its roots in a bygone age, the legacy of the Aztecs and the Mayans is not only a strong cultural identity, but a cuisine that is as fascinating as it is enticing. And what better way to propmote a gastronomic legacy than through Mexico’s festivals, fiestas and ferias?


Corn and Tortilla Fair (Santiago Tepalcatlalpan) Held between May 26 and June 3 in one of Mexico City’s outlying areas - Xochimilco this is one of the more popular tourist destinations in the city, in part due to chinampas, its man-made island which can be explored while on board one of the many trajinares (traditional rowing boats) available for hire. The real highlight of this town is the Corn and Tortilla Fair which showcases the traditional method of preparing and eating grains. Considering that Mexico is both a producer and enormous consumer of products based on this staple crop, the visitor can expect the lavish buffet of dishes made from corn such as tlacoyos, ponteduros, esquites and kernels cooked in butter and sprinkled with chili powder and epazote (a common Mexican herb - reminiscent of Oregano).

Ice Cream Festival (Tulyehualco) Anyone who wants to get their ice cream fix need not look farther than Tulyehualco. To honor the pre-Hispanic tradition of harvesting ice to make frozen treats, more than 80 ice cream makers gather every 22nd of March, bringing with them the best flavors in town. This is every kid’s dream, no matter the age of the child concerned. Just be sure to carry a painkiller with you though, chances are, this 127-year-old fair is going to leave you with a nasty a nasty ice cream headache.

Amaranth Candy and Olive Festivals

(Xochimilco, Mexico City) This is another festival that will satisfy even the most demanding sweet tooth. With a huge variety of treats, ranging from hot drinks, moles, sweet snack bars to cereals and noodles, leave it to the locals to come up with various ways of preparing amaranth, a grain that has been cultivated in the region for around 8,000 years. It is said that amaranth was an essential part of almost every religious ceremony during the Aztec times.

Apple Fair (Zacatlan) We all know that an apple a day keeps the doctor away. In Zacatlan they don’t seem to like the men and women in the surgical coats at all - there are enough apples (and apple related products) at this fair to keep entire legions of medical practitioners at bay. They seem to have applied the theory that if a single apple can keep a single doctor away, then multiple apples should be able to deal effec-

tively with any number of MD’s. Hundreds of apples are thrown at you every day if you happen to caught up in the frenzy of Zacatlan de las Manzanas. This weeklong celebration, starting on August 10 and running until the 18th, also underscores the importance of manzana (apples) in this region. The Apple Fair is also the people’s way of giving thanks for the bountiful harvest, which is evident in the large display of apples in every kind. Various apple tarts like the manzana hojaldra are also much in evidence.

Traditional Mayan Food Fiesta As the name indicates, this festival is characterised by the wide-array of Mayan specialties that are prepared. Celebrated every March on the Yucatan Peninsula, this event is a perfect treat for those who want to experience traditional Mexican cuisine.

Gourmet Festival (Puerto Vallarta) It is one of the largest and most popular food festivals in the country’s culinary capital, Puerto Vallarta. This is no surprise, given the world-class menus created by international and local chefs, featuring dishes that reflect the authentic tastes of Mexico. The festival generally runs from November 12 to November 22, attracting a large crowd of both local and international visitors who want to take part in special events that range from cooking classes, the gourmet food expo, wine and tequila tasting or the grand finale of the gala dinner.

What’s in it for investors? Mexico is one of the best holiday destinations that one could ever hope for. But it’s not just the tourists that are lured to the nation’s beauty and promise; investors too have long realised that alongside landmarks of great scenic beauty and historical value and festivals which add value to the experiences of locals and visitors alike, is a property investment landscape that is full to the brim with investment opportunities. The co-author of the recent study titled ‘Investment in Mexico’, Jose Manuel Ramires, says it best when he wrote: ‘For many years, Mexico has been doing all it can to attract investors and has reached a high level of sophistication. There’s really a lot of great possibilities there.’ Jones Lang LaSalle, in its Global Report, also said that ‘Mexico was the growth story of 2013 for investment activity’. It re-

ported that the country also logged a significant increase in investment volume in 2012 as the numbers spiked to USD $4.4 billion. This improvement is an indicator that ‘investors took note of the solid Mexican economy and sought higher yielding alternative investment destinations where risks were assessed to be lower’, according to the well respected Jones Lang LaSalle report. In the last decade Mexico has made dramatic changes to its economic landscape. According to the World Bank, the country is now the 13th largest economy in the world at USD $2.4 trillion. When it comes to purchasing power, it ranked 11th worldwide. Mexico has, nevertheless, had its fair share of uncertainties, which were largely evident in the early 1980s economic turmoil. During the 90’s Mexico experienced a massive depreciation of country’s currency. But it was the global meltdown which started in 2008, which hammered the country into a deep recession, in large part due to its dependance on the US market. If the US market catches a cold, then Mexico is not far behind with a serious case of the economic sniffles. This was a period of sharp declines in foreign direct investment. But thanks to a slew of policy measures enacted by the government, Mexico regained its economic footing and eventually showed signs of a strong recovery. The favorable economic conditions, coupled with the government’s effort to encourage the entry of more investors well as the booming tourism market are an indication that Mexico is a secure investment location. These factors have also helped in attracting more foreign investors to the Mexican property market. But according to the George Haley, professor of marketing and international business at University of New Haven, it is the country’s location that added luster to its market attractiveness. ‘Given this geography, it’s easy to see that virtually all of Mexico is a candidate for investments seeking to serve U.S. markets’, University of New Haven’s Marketing and International Business Professor George Haley said to CNBC. NuWire Investor, an online news source for investment, outlined the three essential elements that make Mexico an attractive investment destination for those in search of quality property investments, particularly the buy-to-let type: » Strong and growing tourism market » Relatively low expenses

41


feature

» High rent-to-value ratio » Personal enjoyment of the property

1 Mexico City Touted as the heart of the country’s economy, this large metropol is said to have a per capita income that is twice the national average. Want proof that it is also a thriving investment hub? How about the fact that the city attracted a total of around 55% of the total direct foreign investment in the country 2000 and 2010. Besides the wide array of gourmet selections and street food, Mexico City also boasts a number of historic centers recognised by UNESCO. It is not short of bustling markets, trendy shopping centres, classy restaurants, cafes, parks, plazas and other attractions which make it a magnet for tourists wishing to experience the urban face of Mexico. 2 Merida, Yucatan History buffs would certainly fall in love with the Yucatan area as it still exudes a strong Mayan presence. Sometimes called the ‘White City’ or La Ciudad Blanca, Merida is home to the ancient-colonial buildings, significant archeological sites, colourful folk arts, music and dance, and of course the ever present clues to the Mayan heritage of modern day Mexico. Although a bit isolated from the rest of the country due to its geographical location, Merida is nevertheless a popular destination for both foreign and domestic tourists. A further

42

OPPORTUNITY KNOCKS Home to around 8 million people and a vibrant tourist destination, Mexico City is full to the brim with opportunity - and great food.

to AP newswire is a trend particularly in the northeast side of Merida where solid, income producing opportunities can still be found at prices that are attracting a lot of global and domestic attention.

3 Puerto Vallarta attraction is the unique culinary style of the region, which shows marked differences from that found in other parts of Mexico. The regions residents’ love for entertainment is reflected in the numerous cultural events being held almost every week. Merida is also one of the fastest growing cities in Mexico, fo llowing some dramatic changes to its economic landscape in the recent years. This transformation is attributed to the growing investments in infrastructure, education, food processing and transportation. Just recently, IBM chose to establish its seventh Mexican office branch in Merida, parting with a healthy USD $4 million worth of investment for the privelege. In the real estate context, property investors have seen the vast potential of the area, given the recent increase in the land value, which is forecast to continue for at least the medium term. According to the Associated Press (AP) newswire the ‘financial difficulties in the USA and Europe have created great buying opportunities in Merida’s historic district and on the beach’. However, it’s not only the foreigners that are driving up the demand, local buyers have also been investing heavily in beachfront property in the area. The city has also seen a robust demand for rental properties, which according

Puerto Vallarta is expected to attract growing numbers of tourists, as it is one of the main destinations that the Mexican government is focusing on in terms of stimulating the tourism industry. This effort may very well reward investors in the region’s real estate market. It should be noted that the market took a hammering during the recent economic downturn due to contagion from the Uiinted States economy. Savvy investors could probably still pick up a bargain here and there as market conditions slowly normalize. The region is emerging from the financial shock and implosion of the property markets both domestically and North of Mexicos and is now poised to becoming one of the most robust markets in the country. BanderasNews wrote that ‘Mexico’s strong economy, the demand for lower living costs, along with the lifestyle foreigners can find in Mexico, has Vallarta poised for a strong year’. It also pinpointed the areas which have already seen a rapid recovery in the real estate scene such as the Romantic Zone, Amapas, Conchas Chinas and South Shore. PVLifestyle, a real estate firm based in Puerto Vallarta, also assured the property buyers that investing in the region might pay dividends. Given the accelerating recovery, investors can expect an annual value increase between 7-10%, representing a ‘wise venture for those looking for long-term investments with good return,’ according to PVLifestyle spokespeople.

© GRAULIFLOWER / FLICKR

NuWire Investors also explained that besides a superior return on investment, investors can also ‘personally enjoy’ a vacation property in Mexico, thus making it a ‘dream investment’ and ‘dream lifestyle at the same time’. When it comes to capital gains tax, one can be exempt from paying so long as you can prove that you have resided in the property for at least six months, according to International Living. Rental yields as high as 7.76% with an average monthly rent of USD $2,045 are also extremely attractive. On the other hand, average property price per sqm is at USD $2,635, according to Global Property Guide. Perhaps even better returns are possible if investors apply a little bit of lateral thinking to investing in Mexico. While it is true that beachfront property is the usual target for buy-to-let investors, it’s also worth noting that Mexico is renowned worldwide for its cuisine scene. So an investing in a holiday rental home in any one of these three popular foodie locations may be worth investigating:


MEXICO UPDATE CURRENT PROPERTY TRENDS Following a noticeable improvement in the economy, the Mexican government is moving on to its next target— the sluggish real estate market. Recently though, there ahve been signs that the market is gradually coming back to life, thanks to the surging demand and a strong inflow of foreign investments. More so, the lawmakers also plan to loosen the foreign ownership restriction, particularly in areas near coasts and borders, to ensure the steady recovery of the market. In addition, Jones Lang LaSalle said that ‘Mexico was the growth story of 2013 for investment activity’ as it logged a significant increase in the investment volume in 2012 at USD $4.4 billion.

FESTIVAL / DISH FOR YOUR BUCKET LIST: MOLE POBLANO - If you think that mole poblano is just a chocolate sauce, then you’re in for a big surprise. Consisting of about 20 ingredients including chili peppers and chocolate, mole poblano is a thick, rich, dark-colored sauce, fragrant and hot, which is used in numerous Mexican culinery creations. The standard mole poblano recipe contains three types of chiles, tomatoes, bread, tortilla, onion, garlic, chocolate, chicken stock, banana, lard, almonds, sesame seeds, salt and spices such as pepper, clove and anise. Best served over meat, this national dish is also usually present during special occasions such as weddings, birthdays, baptism, Christmas, and national holidays like Cinco De Mayo.

TO BE ENJOYED AT PUEBLA:

The best place to enjoy mole poblano is of course in Puebla where it was rumored to have originated. Situated in a valley surrounded by volcanoes and mountains, Puebla lies 80 miles southeast of Mexico City. This may be a bit far, but it’s worth the effort, especially if you’re a fan of traditional Mexican cuisines. Not only would you be able to savor the original mole poblano, served in its home region, but also get a taste of other classic dishes such chalupas, cemitas, and chiles en nogada.

PROPERTY BASICS AVERAGE PRICE

USD $2,635 psm

RENTAL YIELD

7.76%

RENT PER MONTH

USD $2,045

CAPITAL GAINS TAX

25%

COUNTRY INFORMATION OFFICIAL NAME

United Mexican States (Estados Unidos Mexicanos)

CAPITAL CITY

Mexico City (Distrito Federal)

CURRENCY

Mexican peso

LANGUAGE

Spanish Language

TOTAL AREA

1,964, 375 sq km

POPULATION

116, 220, 947 (July 2013 est)

TIME ZONES

GMT/UTC -6

DIALLING CODE

52

GDP (Nominal; 2012 IMF estimate)

USD $1.177 trillion (2012 est.)

GDP PER CAPITA (Nominal; 2010–2011 IMF estimate) HUMAN DEVELOPMENT INDEX

USD $10, 247

0.775 (High)

WHERE TO BUY It’s not just chilies that are putting spice in Mexico but also the property market, which saw a dramatic improvement in the recent years. Touted by Jones Lang LaSalle as the ‘growth story of 2013’ the Mexican market has finally fallen into the radar of overseas investors. According to President Enrique Peña Nieto, they expect that ‘2013 will be the year when Mexico attracts a record amount of foreign direct investment, perhaps over USD $35 or $40 billion, the highest in the recent history of our country.’ Indeed, it’s high time for investors or homebuyers to own a property in this country, be it for financial or lifestyle reasons. Either way, here are some of the areas to best put your money on: Merida, Yucatan – Nestled in the heart of Yucatan Jungle, this ‘White City’ is just about one of the most significant places in Mexico to experience the Mayan heritage. As it is somehow isolated from the rest of Mexico, property prices here are more affordable and commodities come in cheap albeit good quality. Buying a property here is an excellent catch for homebuyers because not only does Merida boast a unique cuisine, culture, and tradition but also magnificent colonial homes and buildings. Puerto Vallarta – Its catchy slogan ‘Where Mexico comes to life’ aptly describes the ‘old town’ atmosphere here. Situated on the Pacific coast, this once fishing village is transformed into an extraordinarily lively town with great restaurants, world-class resorts and stunning beaches aboard. Nevertheless, the town managed to retain its old world charm, which makes it a popular choice for tourists, expats, and even investors. No wonder, it’s one of the most important destinations in Mexico. Lake Chapala – The major draw here is the weather, which is touted by the National Geographic as the second best climate in the world. This could be one of the reasons why this area is a favourite retirement enclave with largest expat community to boast. But of course, lake Chapala has other strong points that make tourists very enamored to this place such as stunning mountain views, tropical foliage, lower cost of living and easy access to popular tourist spots to name a few. Moreover, the real estate market here is relatively stable and investors could expect a promising growth potential.

BUYING PROCESS Buying a property in Mexico can be a good venture especially if you are after lifestyle rewards. It’s no secret that it is one of the most fun-filled holiday destinations in the world given the number of festivals, range of tourist attractions, stretch of magnificent

beaches, and natural beauties that makes the country a great choice for second home. Now if you want to live in Mexico long-term, then might as well start house hunting. The buying process, however, is a little bit complicated, as foreigners are in general not allowed to legally purchase property in Mexico. There are two options though, either use real-estate trusts or a Mexican front corporation. To give you an idea on how a Mexican property is being purchased, here’s the general procedure: ➊ Offer and Acceptance Most commonly known as an Offer to Purchase Contract, this transaction involves an attorney or real estate agent who would draft the buyer’s proposition, which often includes the basic terms and conditions for the purchase, to the owner of the property. ➋ Promissory Agreement Once the offer is accepted, an initial written agreement to sell/buy will then be signed, making both parties bound by the terms to execute an agreement at closing by the Notario Publico. However, should either one of the parties decide to back out even after signing the contract, there will be a corresponding penalty which is oftentimes equal to the deposit. ➌ Title Search Prior to the final payment, a detailed searches must be executed on the property particularly if it is in remote or underdeveloped areas of Mexico. It is best if the buyer would enlist the help of attorney to conduct the title search as the latter can also provide legal advice on the matter. ➍ Certificate of No Encumbrances The final stage of real estate transaction usually takes 30 to 45 days to complete. This is the time when the Notario Publico transfers the title to the buyer who in turn will have to pay off the remaining balance to the seller after the closing documents are signed. Also, all taxes, fees and charges associated to with the property purchase will have to be settled at this point. All transactions of land rights must be via deeds executed before a land deed official at the local office of the Pejabat Pembuat Akta Tanah (PPAT), where the land is located, and must be registered in the regional office of the National Land Agency. Although there is no regulation regarding language, it is recommended having contracts and agreements drawn up and executed in Bahasa Indonesia (or two languages) to prevent potential arguments that the local partner did not fully understand the content. SOURCE LAWMEXICO.COM

GETTING IN VISA REQUIREMENTS Depending on the tourist’s nationality, he has to present either a visa or passport to gain entry in Mexico. Besides the main requirement, tourists are also required to fill out an immigration form, which can be obtained from travel agencies, airlines, or upon landing in the country. AIRPORTS AND AIRLINES For international arrivals, Mexico City’s International Airport is the main portal to get into the country. As for international airlines, Aeromexico and Mexicana are primarily responsible for bringing in millions of tourists in the country every year, thanks to their reputation as the leading carries for Mexican air travel market. Besides these two, among the important international Mexican airlines include InterJet, VivaAerobus, Volaris.

43


feature

F L O R I D A

Seeking value in the Sunshine State

Miami provides a heady mixture of fun, sun and investment potential

S

ometimes, a person just has to get away. When it is time for a holiday, there are few locales as capable of providing so memorable an occasion as the beautiful state of Florida. Boasting a warm, mild climate and over a thousand kilometers of beachfront, Florida offers visitors a seemingly endless succession of festivals and events and provides a year-round party atmosphere. Located on the southeast tip of the United States, the aptly-named “Sunshine State� is one of the most popular tourist destinations in the world. A record-setting 90 million people visited Florida in 2012, including almost 14 million foreign travelers. This number is all the more impressive, because 2011 was itself a banner year for tourism, with almost 86 million visitors. All signs point to this upward trend continuing. Tourism is also the single largest industry in Florida, bringing up to USD $60 billion into the state’s economy. Because of this constant parade of travelers and the resultant influx of dollars, real estate investors specialising in shortterm to let properties can find themselves

44

uniquely positioned to realise a steady, long-term return on their investments. Perhaps the most attractive aspect of focusing on providing to let accommodation for tourists is the virtual lack of any lengthy periods of vacancy. The festival season in Florida is practically year-round, meaning that with proper planning and scheduling, a property can usually achieve full occupancy.

Miami Any discussion about Florida has to begin with Miami. As a city proper, Miami has a population of less than half a million residents, but that number swells to over five and a half million residents when viewed as a major urban area. Rental properties in Miami are in very high demand, for a number of reasons.


Š FROM TOP: MIAMI PANAROMA, LILI BASMATI JOHNS / WIKIMEDIA COMMONS; OPPOSITE PAGE: ELAPIED / WIKIMEDIA COMMONS

The city’s real estate market crashed in 2007, resulting in a greatly increased number of foreclosures. Many developers also shelved projects for multi-family housing units. This reduction in the available number of apartments is driving the interest in all rentals/to let properties, both single and multiple family properties, and both short and long-term lease options. Conversely, the foreclosures have currently depressed prices, making the acquisition of many properties particularly attractive to investors. While foreclosures are high, the overall economy in Miami is booming. According to a recent study by Swiss global banking giant UBS, Miami is recognised as the richest city in the United States, and the fifth-richest city in the world, in terms of overall purchasing power. Because of its economy and culture, Miami was designated in 2010 as an Alpha-level world city. The rental rates in Miami reflect this. For single family residences, the average monthly rate as of July 2013 ranges from USD $1,400 for one-bedroom properties to USD $2,400 for four bedrooms. Multi-family properties have average rates ranging from about USD $1,600 to just over USD $2,100 per month, depending on the number of bedrooms. For real estate investors, the smartest money would seem to be found investing in the more popular and more in-demand one and two bedroom properties. The average monthly rate for a two bedroom apartment is approximately USD $1,950. This is up from about USD $1,750 per month one year ago, representing an increase of over eleven percent. Two bedroom single family residences saw an increase of over sixteen percent, from USD $1,550 to USD $1,800, in the course of a single year. Similarly, one bedroom properties are also seeing percentage increases in the double digits.

The Orange Bowl JANUARY

THE BOUNTY OF THE OCEAN Florida provides both culinery experiences and world class lifestyle choices, as well as ample opportunities for investment.

Conversely, average monthly rental rates for Miami properties with more than two bedrooms are declining, possible due to lesser demand. In August of 2012, a fourbedroom apartment in Miami would rent for approximately USD $2,550 per month, but currently, that average is down to a little over USD $2,100. This equals a drastic decrease of almost seventeen percent. The good news is that regardless of the type of property, the occupancy rate is outstanding. According to an independent study commissioned in 2012 by the Miami Downtown Development Authority, ninetythree percent of all the condominiums built within the last ten years in downtown Miami are occupied full-time.

Festivals and Events Almost every month of the year there is some sort of event or festival in the Miami area that draws thousands of people from around the world. This means that to let accommodations are always at a premium, any time of year. Of course, this also means that a real estate investor nearly always has a pleasant reason to come and inspect his or her properties.

Rated as one of the top sporting events in the country, this American collegiate football game and its associated events brings tens of thousands of visitors and hundreds of millions of dollars into the local economy. The game itself, which takes place at Sun Life Stadium, part of the annual collegiate championship series draws almost 80,000 fans to the stadium, and many thousands more participate in various events during the preceding week.

Art Deco Weekend Festival JANUARY

Sponsored by the Miami Design Preservation League, this weekend-long festival draws antique art and design lovers from around the world. Nearly 400,000 people attended last year to celebrate the Art Deco Era and its unique place in history. The theme for 2014 will be the toys, games, and characters influenced by the style, with hundreds of vendors offering antique art, vintage fashions, and memorabilia.

Food Network South Beach Wine and Food Festival FEBRUARY

This four-day destination festival, presented by Food & Wine, has become a Nirvana for foodies from around the world. For thirteen years, the SOBEWFF has showcased the individual talents of famous television culinary celebrities and internationally-renowned chefs. Cooking demonstrations, wine tastings, and photo opportunities are the order of the day as attendees get the chance to interact with their favorite chefs. In 2013, over 65,000 visitors attended the festival. In 2014, over 200 famous chefs and television food personalities and over 150 premier wine and spirits producers will be featured, and over fifty separate events are planned.

45


feature

Miami Broward Carnival

FEBRUARY

Coconut grove is the oldest modern continuously-inhabited neighborhood in Miami, and for the past fifty years, one of its grandest traditions has been the annual arts festival. The Festival has come to be recognised as one of the most prestigious art events in the United States, and in 2013 almost 400 artists were showcased. Over a quarter of a million visitors were able to experience the pinnacle of many different artistic disciplines - visual, performing, and culinary arts are well-represented in this event. Imagine being able to purchase a breathtaking painting or sculpture while you are enjoying a fivestar meal, and you will have some idea of the Coconut Grove Arts Festival experience.

Florida Renaissance Festival MARCH

Taking place at two different locations, Miami and Deerfield, the Florida Renaissance Festival is spread over six weekends and offers a trip into the past for all who attend. Performers festooned in authentic period costumes stay completely in character as they tumble, joust, juggle, and bring to life the wonders of centuries past. In 2013, over 90,000 visitors interacted with knights, kings, jesters, minstrels, and maidens fair as they enjoyed such fare as smoked turkey leg and roasted corn.

Carnaval and Calle Ocho Festival MARCH These two massive festivals held a week apart celebrate the Spanish, Cuban, and

46

FOOD FAIRE In Florida the festivals provide a riot of colour and the opportunity to sample both regional and international cuisine.

Caribbean cultures that have shaped Miami. Sometimes described as “the country’s biggest street party”, the Calle Ocho Festival can draw over a million revelers in a single day, and once boasted a continuous conga line with over 119,000 dancers. Authentic Miami-style Cuban food is hawked by street vendors, offering everything from black beans and rice to shrimp tacos to the famous Cuban sandwich. Traditional music and dance is omnipresent and around-the-clock.

Miami / Bahamas Goombay Festival AUGUST

In 1976, the descendents of the Bahamian immigrants who first settled Coconut Grove started this festival to celebrate their ancestors’ contributions to the diverse Miami culture. Today, it is one of the largest heritage events recognising Black culture in the entire country, attracting hundreds of thousands of people over the course of a single weekend. Traditional goombay music, dancing, folk art, and even a beauty contest are among the events. Traditional food from the Bahamas can be found for sale during the festival, including conch fritters, boiled fish and grits, guava duff, and even Kalik, the country’s national beer.

OCTOBER

Over 250,000 people from every corner of the globe arrive each October to enjoy this vibrant Caribbean cultural event. Soca, konpa, reggae, and calypso music is played by traditional bands while street dancers in colorful, elaborate costumes go by in a parade over two miles long. This week-long intercultural phenomenon has something for the whole family, with spectacularly costumed performers led by the Carnival King and Queen, children’s activities, concerts, and offerings of authentic Caribbean fare, such as goat curry, callaloo, and rum punch served in hollowed-out pineapple cups.

Statewide Although Miami is the most popular tourist destination, there are several events and festivals throughout Florida that are worth mentioning, both for their cultural and entertainment value and for the to let opportunities they present to investors. As a general rule, the average monthly rental rates do not match those found in Miami, but the opportunities to create positive cash flow are still abundant.

Florida State Fair, Tampa FEBRUARY

Always in February and always in Tampa, the Florida State Fair is a twelve-day event celebrating the state’s agribusiness and showcasing livestock and produce from all regions of Florida. On average, over 600,000 patrons flood the Midway each year to enjoy the rides, attend the concerts and shows, and shop among the hundreds of vendor booths. Specialty foods that can

© FROM LEFT: DAVE COOK, WALTERPRO4755 / FLICKR

Coconut Grove Arts Festival


Invest in British history

From only £10,000/USD $15,391

10.4 % projected yields

Education investments are a contemporary, ethical alternative that provide a secure teaching platform for future generations. Scarisbrick Hall would like to offer investors the opportunity to be a part of the school’s expansion, development and growth. The opportunity will be for investors to purchase shares in the historical grade 1 listed building, the hugely successful Beautiful Beginnings Nursery, TCM (Teaching, Coaching and Mentoring) extracurricular activity division, state of the art sporting facilities, international boarding facilities and the new 6th form college.

Investment highlights: Grade 1 listed historic investment Min. £10,000/USD $15,391* investment for share purchase £34.5M to purchase 49% shares Min. 3-year investment - dividends paid on and after year 3 10.4% p.a. projected yields Asset secured investment Sipp approved investment Excellent yields over a medium to long-term period *Price based upon an exchange rate of 1.54 USD

REQUEST YOUR FREE INVESTMENT BROCHURE NOW www.buyassociation.asia/scarisbrick/propertylife Tel: +65 6534 9390


feature

Palm Beach are roughly the same as they were a year ago.

Sunfest, West Palm Beach

Fiesta of Five Flags, Pensacola

MAY

JUNE

Held the first week of May, Sunfest is the largest waterfront art and music festival in the state. This four-day event has been observed since 1982 and attracted more than 165,000 visitors this past May. In addition to sponsoring a Fine Arts and Crafts Show featuring the paintings, sculpture, jewelry, and pottery from hundreds of nationally-recognized artists, Sunfest is also a major musical event. The most resent festival showcased over fifty famous musical acts from several genres. For food lovers, one of the special events on the schedule is an offering from some of the fine dining establishments in the area. Attendees of this event can sample unique chef ’s creations that have been expertly paired with specialty drinks and cocktails. Average monthly rental rates in West Palm Beach are currently between USD $750 for a one bedroom apartment on a single family property and just over USD $1,600 for a property with four or more bedrooms. Unlike the case in Miami, the rates in West

One of the oldest and largest festivals in Florida celebrates Pensacola’s founding in 1559 as the first European settlement in the United States. Since that time, the flags of five different nations have flown over the city, Spanish, French, British, Confederate, and American. One of the many highlights from this ten-day festival is Fiesta Days, in which an entire complex is transformed into five distinctly decorated areas, each room replete with foods representing one of the five nations. Other highlights include an immense parade, complete with competing dance “krewes”, a re-creation of the landing of the first Spanish ship, and a coronation of the Don de la Luna. Other events sponsored under the Fiesta banner are the Pensacola Seafood Festival, held in September and voted “Best Annual Food Event”, and the Pensacola Crawfish Festival, held in May, which invites attendees to get their Cajun on as they enjoy such dishes as red beans and rice, po’boys,

48

THE SUNSHINE STATE A combination of fantastic weather, a vibrant tourist trade, abundant property choice and the steady inflow of domestic dollars place this state firmly on the map of potential property investment destinations.

and over 16,000 pounds of boiled crawfish. Average rental rates in Pensacola are extremely stable. Across the board, the rates for all types of to let properties remain virtually unchanged from where they where a year ago. A one bedroom house on a single family property can be rented for just over $500 USD, and a two bedroom apartment in a multi-unit consistently costs USD $700.

Unique Opportunity When all factors are considered, Florida provides a singular opportunity for real estate investors looking to acquire to let properties with the intent of generating a continuous positive monthly cash flow. On one hand, home foreclosures have been consistently high of late. This creates a type of economically captive market of homeowners affected by foreclosure. Of necessity, there is an extremely high demand for adequate to let properties offering full-time leases. On the other hand, the constantly busy event and festival calendar means a steady flow of tourists and travelers needing accommodations. Hotels have not always proven sufficient to meet the needs of travelers desiring to stay more than just a few days. Short-term leases of individual houses on a month-to-month basis are very popular with guests desiring more privacy and convenience than is usually offered by hotels. It seems that in Florida, especially in and around Miami, the greatest challenge does not lie in keeping units occupied, but rather investing in just the right combination of properties and leases offered to both long-term residents and short-term visitors.

© MR. THOMAS / FLICKR

only be found at the fair are always popular: funnel cakes, giant corn dogs, and some foods that you never thought possible. Among the more unusual offerings are deepfried Kool-Aid and deep-fried, chocolatecovered candied bacon. For real estate investors, average monthly rental rates will range from a low of approximately $750 USD for a one bedroom property to a high average of about $1625 for properties with at least four bedrooms.


FLORIDA UPDATE CURRENT PROPERTY TRENDS By the looks of it, Florida seems to be finally seeing some sunshine in its real estate market. Various report point that the sector continues to register positive growth this year which is good news considering how the country had suffered when the US market crashed. It should be noted that the prices and demand took a plunge during the recession, placing Florida in the ‘epicentre of housing bubble-bust cycle.’ Nevertheless, the state is back on track with prices and demand shooting upwards. According to Florida Realtors President Dean Asher ‘it’s encouraging to see median prices continuing to recover in areas across the state. We’re seeing double-digit gains in statewide closed sales, new listings, pending sales, and higher median prices.’ He also noted that the housing market is growing and this bodes well for the country’s economy. In addition, recent figures show that inventory levels are up by 3.9% on a monthly basis while home prices jumped by about 15.6% on an annual basis. Foreign direct investments, on the other hand, have also increased pumping up more revenue in the country’s coffer. As for homebuilding, Moody’s Analytics senior economist Chris Lafakis forecast that construction in Florida will pick in 2014 and 2015 as a result of stronger international demand and more domestic demand.

FESTIVAL / DISH FOR YOUR BUCKET LIST: KEY LIME PIE - The Sunshine State’s most popular dessert is taken after the name of Floridians’ favourite citrus, key lime. Mixed with egg, sugar and sweetened condensed milk, key lime brings out the luscious taste of the pie which is best eaten after a sumptuous seafood meal.

TO BE ENJOYED AT A BEACHFRONT PROPERTY IN TAMPA: The glorious view of a sunset with the sound of ocean waves in the background is a delightful experience for any tourist seeking a day off from the bustling metropolitan life of the Sunshine State. And wouldn’t it be delightful to enjoy your Key Lime Pie while taking in the picturesque view from the balcony of a waterfront property in Tampa?

Port of Miami, Miami Beach

BUYING PROCESS

PROPERTY BASICS AVERAGE PRICE

USD $179,000

RENTAL YIELD

N/A

RENT PER MONTH

USD $1, 050

CAPITAL GAINS TAX

23.8%

COUNTRY INFORMATION

© FROM TOP: MATTHURST / FLICKR; RALPH DAILY / WIKIMEDIA COMMONS

It is also customary that the buyer pays at least 10% of the property price into an ‘escrow’ account which he would not be able to refund should he decides to withdraw from the deal. After which, a licensed home inspector and appraiser will inspect the property and its public record to identify whether there are any issues or impediments to the sale. At this point, title search is also conducted to ensure that the property is clear of any charges or liabilities and does not have any third party claims.

OFFICIAL NAME

Florida

CAPITAL CITY

Tallahassee

CURRENCY

US Dollar

LANGUAGE

English language

TOTAL AREA

65,755 sq mi

Once everything is in order, the buyer pays the balance of the purchase price and both parties sign the final documents followed by the transference of ownership and registration with the local authorities.

POPULATION

19,317,568 (2012 est)

SOURCE WWW.APLACEINTHESUN.COM/USA

TIME ZONES

GMT/UTC -5h (ST) GMT/UTC -4h (DST)

GETTING IN

DIALLING CODE

+1

GDP (Nominal; 2012 IMF estimate)

USD $674 billions

GDP PER CAPITA (Nominal; 2010–2011 IMF estimate)

USD $40, 106

HUMAN DEVELOPMENT INDEX

0.936 (Very high)

WHERE TO BUY As one of the most popular tourist destinations in the face of the planet, the Sunshine State attracts not just millions of travellers but also homebuyers who are looking for holiday homes or a place to permanently settle in. Beachfront properties in West Palm Beach and South Beach are naturally appealing to families because of their refreshing atmosphere, open lifestyle, tons of cruising adventures and funpacked family activities, which these cities offer.

Key Lime Pie

Upon deciding which property to purchase, the real estate agent will draft a contract detailing the buyer’s offer to buy the property as well as the terms and conditions associated to the purchase. When signed by the seller, this will become a binding contract, though there may be contingency clauses that allow either of the two parties to pull out under the specified circumstances.

But for a more vibrant lifestyle, trendy nightlife and nonstop shopping, then a property at Miami or Orlando is the way to go. These two never fail to attract tourists who still have high energy to spare after a long day of shopping at Bal Harbour Shops or touring around the Walt Disney World.

For more detailed guides, visit www.propertylife.asia/countryguides

VISA REQUIREMENTS Depending on the traveller’s country of origin, a visa or passport is the main gate pass to Florida. For those who need visa, they can apply at the nearest consulate or embassy in their area of residence. This should be done several weeks before the date of departure because visa application usually takes several weeks before being approved. On the other hand, nationals included in the Visa Waiver Program are required to present individual machine-readable passports valid for at least 90 days from date of entry. WWW.WORLDTRAVELGUIDE.NET/UNITEDSTATES-AMERICA/PASSPORT-VISA

SOURCE

AIRPORTS AND AIRLINES The four major international airports, which accommodate millions of passengers flying to Florida every year include Miami International Airport, Orlando International Airport, Fort Lauderdale-Hollywood International Airport and Tampa International Airport. These airports are served by major US and European carriers such as Delta Air Lines, United Airlines, British Airways and Virgin Atlantic Airways. There are also other large airports in the state that fly tourists to their desired destination including Jacksonville, Pensacola,Fort Myers, Tallahassee, St.Petersburg/Clearwater, West Palm Beach, Sarasota, Key West, Gainesville, Melbourne, and Sanford.

49


Fiestas, bullfights and tomato throwing sound like fun, and these pastimes certainly contribute towards the mystique of Spain. However, are there other reasons why this sun-drenched country continues to excite property investors, even in the midst of what many view as the perfect storm of regional economic woe.

P

BY VITTORIO HERNANDEZ

erhaps one of the reasons that property investors are attracted to Spain is that the fiesta mentality is the perfect antidote for the doom and gloom that accompanies the current state of economic doldrums on the rest of the European continent. The upbeat attitude of those investors looking for buy to rent opportunities in Spain may currently be tempered by a dose of Eurozone reality, but many believe that the current situation will not last.

50

© FROM TOP: GABRIEL BONINO, PINCASPHOTO / FLICKR

Viva Espana!

Both the numbers of tourists and the annual fiesta calendar are buoying the spirits of potential investors and providing some relief from a regular diet of bad economic news peddled by both European and global news outlets. The 58 million international visitors in 2012 are a persuasive ambulatory argument that Spain is a world-class tourist destination. The country is in fact in the top three of the most popular destinations for tourists, along with France and the United States. Tourism currently accounts for around 11% of the national GDP. Beaten into second place by tourist Mecca France (with 83 million estimated tourists in 2012), Spain is the second-most visited nation in Europe, which dominates the tourism stakes with only three non-European nations making the top 10*. Spain’s fiestas are by and large influenced by the country’s predominantly Catholic faith, however there are numerous other cultural festivals that do not have religious origins, including two in which the colour red features predominantly. First are the famous bullfights in which the highly skilled matadores entice the bull to charge at them by waving bright red cloths while engaging in a highly stylised and choreographed set of movements. Second is the La Tomatina festival, held each August, when 15,000 visitors flock to the town of Bunol in Valencia to join 5,000 townspeople in throwing 240,000 pounds of ripe, red tomatoes at each other in a one hour long frenzy of exuberant and extremely messy fun. High tourists numbers mean a huge inflow of tourist currency. The visitors spend money on accommodation, food, travel and shopping. A combination that provides ample opportunity to maximise rental incomes. However, a growing number of financially savvy tourists are enjoying their weeks of R&R in sunny Spain while at the same time offsetting their costs by renting out their properties to others in search of their place in the Mediterranean sun. Investments of these types are becoming more and more popular as holidaymakers seek to maximise medium and long term returns as well as offset the costs of vacation time in one of Europe’s favourite tourist destinations. The extra income in the form of rentals from fellow tourists adds to the allure of this type of investment. Chronic overdevelopment and the subsequent property implosion in 2007 – 2008


has meant that the Spanish government and developers themselves are keen to attract overseas buyers to the country. It also appears that bad news for the Spanish property market is good news for the savvy investor. The time may be right for those interested in investing in a property for rent on the Mediterranean coast to make some serious enquiries. In keeping with this edition’s theme of lifestyle and added value, PropertyLife would like to take potential investors on a lightening tour of Spain’s top festivals. By understanding the nature of these joyful celebrations of life on the Iberian Peninsula, prospective investors may be tempted to supplement their usual decision making process which is firmly rooted in the ‘it’s got sea and there’s sand’ school of decision making, and take a closer look at some of the more cultural attractions of this attractive investment destination. Of course, we’ll also be taking a look at the facts around rental yields and capital gains as well as tourist hot spots and cost of apartments in the latter part of this article. In the meantime, senoritas y senoritos, pack that abanico (fan), panuelo (shawl) and chaleco (vest) as we head for one of Europe’s most popular playgrounds; Spain and the Iberian Peninsula, home to fiery Spanish culture, and rich culinary traditions. Vámonos Amigos (‘let us continue friends’).

© FROM TOP: TAMORLAN / WIKIMEDIA COMMONS; AVXLYZ / FLICKR

Viva, Espana! The Spanish conquest of the new world and their colonization of South America has left its mark on cultures across the world. There are currently 500 million of Spanish first language speakers in countries ranging from Brazil and Paraguay up to the doorstep of North America in Mexico, making it the third most-spoken language after Cantonese and English. Spain is no longer the global political or military power that it once was. Buffeted by the global economic crisis and a rocked by a property market which took a battering (from which it is still recovering) in 2007 and 2008, it has somehow managed to retain its position as the 13th largest global economy. However, 2008 brought the property market to its knees and an economy which had been characterised by a frenzy of infrastructural and property development suddenly found itself faced with an industry that was bloated by enormous over-supply and rampant inefficiencies.

PASSION, PROPERTY AND PAELLA The cuisine of Spain is widely renowned for its unique and complex pairings of seafood and local produce sourced from inland regions. For some investors, Spain is a mouth watering prospect for reasons other than its food.

In 2008, Spain’s property bubble burst, leading to the collapse of the large property-related and construction sectors, resulting in mass layoffs that caused the bottom to drop out of the property market, a situation exacerbated by the country’s unemployment rate hitting a record-high 27.16% in April 2013, while joblessness among young Spaniards (below 25 years old) reached an alarming rate of 55.7%. While these twin events may give prospective property investors pause and lead to questions regarding the risk profile of Spain, the truth of the matter is that the country is not a particularly high-risk investment destination (inasmuch as this can be said in a highly fluid global investment environment). It’s worth pointing out that despite the domestic economic slowdown (meltdown?) the country has experienced over the past 5 years, the tourists never stopped coming. Spain’s festivals continue to draw in tourists from all over the world. And it is these tourists who are the target market of buy-to-let properties in Spain. The added incentive for investors is that due to the weak economy and bearish property markets, now is the best time to purchase property in Spain. Prices are low, inventory is high and demand is weak.

Despite the country’s economic struggles, Spanish citizens across the country continue to celebrate life. The festivals must go on, no matter if jobs are hard to find, wallets and bank accounts are almost empty and economic indicators paint a bleak picture of the future. The fun-loving Spaniards will continue to revel in fun and joy, gyrating to the music of the Tango and feasting on paella as they observe the following key festivals of Spain.

FIESTA GALORE January – Tamborrada de San Sebastian (The San Sebastian Drum Festival) Groups of drummers parade throughout San Sebastian, Basque Country, on Jan. 1. It is followed by the Tamborrada Infantil (Child Drummer’s Ceremony) on Jan. 2.

51


February – La Endiablada (The Disguised Devils) Young boys from the town of Cuenca, Castilla y La Mancha wear pants and jackets painted in large designs to mimic the devil. The costume includes large cowbells tied to the waist, multicoloured paper hats that are eventually replaced with cardboard bishop’s mitres. The boys run through the streets, dance at the entrances and inside churches and pretend to wash the status of San Blas.

April – Feria de Abril (April Fair) The Seville fair in Andalucia begins shortly after Holy Week and runs from morning until evening. The peak of activities is at noon when there is a long parade of riders and continues lat into the night. Residents believe the holy spirit takes over the thousand throats of the cataores (flamenco singers) and the legs and arms of the bailaoras (dancer) with their four sevillanas. Visitors are treated to sights of multi-coloured tents, wreaths and paper lanterns outlined against the sky. April 22-24 – Fiesta de Moros y Cristianos (Moors and Christians) There are almost 150 celebrations of the Fiesta de Moros y Cristianos throughout Spain, with the first held in January during the feast of the Holy Christ in Valverde del Jucar in Cuenca. The last, the Moorish King, is held in Agost, Alicante in December. However, the majority are held in Alicante, known for its lively approach to festivities. The festival features groups of pseudo Moors and Christians who drive through the town accompanied by noisy bands, followed by a battle which ends with the victory of the Christians who surround the Moors and defeat them. Throughout the festivities, there are fireworks and the ringing of bells. May – Festival de los Patios Cordobeses (The Cordoba Patio Festival) Held in Cordoba, Andalucia, this centuries-old festival recalls the pilgrimage of the Virgin of the Linares Sanctuary by horsemen and richly decorated coaches. It features a competition of Crosses and a Patio, Iron Grille and Balcony contest in which porches, small side streets and plazas are filled with flowers.

52

CALAMARI FRESH FROM THE SEA Spain’s seafood is not the only draw card for both the casual tourist and the investor. Low barriers to entry make Spain tremendously attractive.

June 20-28 – Hogueras de San Juan Held at Alicante, Valencia, the festival involves a series of old rituals based on the fact that it is the shortest night of the year when light triumphs over darkness. It revolves around the feast of San Juan, noted for streets lavishly decorated with branches and leaves, particularly on balconies where young girls await the serenades of their love interests. At the same time, pines and poplars are planted, pilgrimages are held, straw effigies are burnt, the herb thyme is blessed and sanjuanera songs are sung. Summer – Fiestas de Haro (Feast of Haro) There are many festivities during summer, but the most famous is held on June 29, the feast of San Pedro, when the Wine Battle happens at the Riscos de Bilibio. July 25 – Dia de Santiago (Day of Santiago) The feast is a celebration of the patron saint of Spain, held at Santiago de Compostela in Galicia. It has fireworks, parades and a televised mass. It is a national holiday. August 3 – Romeria Vikinga Held at Pontevedra, Galicia, this festivity is a simulation of the Viking invasion of the Torres de Oeste, which was repelled by the Christian natives. At the end of the battle, everyone drinks red wine from the Ulla River and eats seafood, free of charge. The feast is capped by folk dancing.

August – La Tomatina (Tomato Fight Festival) Held yearly at Bunol, Valencia, the feast draws 30,000 participants who throw more than 240,000 pounds of tomatoes at each other. August 28 – Saint Augustine Day This festivity is celebrated in Felanitx, Balearic Islands, featuring a whole week of sports, theatre, a children’s festival and up to five outdoor music and dance night festivals called verbenes. September – Fiestas Patronales de la Virgen de Gracia This is a 400-year tradition in honour of the Virgin Mary, featuring fireworks, gunpowder, music, procession and floral offerings to the Virgin. September – Fiestas de la Vendimia Riojana/La Rioja Wine Festival Usually held on September 21, the Day of San Mateo, at Logrono, La Rioja. It celebrates the harvest of one of the most famous wine regions in Spain.

Market overview A brief review of the current state of Spain’s real estate market in the light of recent economic and business developments would be useful prior to delving deeper into the regional opportunities. Home prices continue their slide as the Spanish economy moves deeper into recession caused by weak demand and stringent austerity measures. The Global Property Guide reported that in June 2012, Tinsa’s IMIE general house price index declined 10.8% compared to the same period in 2011, while house prices in Spain plummeted by about 30.4% from peak levels in December 2007. This is a trend which seems in no danger of reversing any time soon, although

© FROM LEFT: FREECAT / WIKIMEDIA COMMONS; MOLLYSTEVENS / FLICKR

March – Fallas de San Jose The festival held in Valencia, features a night time parade, floral offerings to the Nuestra Senora de los Desamparados (Our Lady of the Forsaken) and the Nit del Foc (Night of the Fire) when grotesque and humorous scenes made up of cardboard figures are burned.


there have been some encouraging signs that the property market may be on the verge of at least slowing the downward spiral. The areas hit badly by plummeting house prices are in the capital city and other major urban areas of the country , which showed the sharpest drop at 13.5% over the past 12 months. It was followed by the Mediterranean Coast where prices went down 13.3%, then Metropolitan Areas by 11.6%, the Balearic and Canary Islands by 6.8% and finally, other municipalities by 7.3%. Land prices, too, are on a downward movement, with the average land price having dropped 16.4% to EUR €177.60 (USD $266) per sqm. With property demand weakening and consumer and investor confidence at an alltime low, the total number of land transactions dropped 19.2% to 3,598 in Q1 2012. There were similar drops in total area of land transactions as well as total value, prompting Spanish banks to grant hefty discounts on their somewhat toxic assets. According to the report, Santander (the largest bank in the Eurozone and one of the largest in the world) cut its property prices between 35% and 45%, BBVA is ready to also reduce prices to get rid of EUR €8.7 billion (USD $11.5 billion) worth of properties on its books and Sabadell Bank is also slashing its property prices by 38%. Such hefty discounts are tempting investors with extra cash to open their wallets and purchase holiday homes for eventual leasing to others.

Where to buy Property Life has focused on buy-to-let properties in three areas, namely: Madrid, Valencia and the Canary Islands.

Madrid All capital cities, despite their urban character, would definitely be in the sights of the astute property investor, in part because the airport is usually located in or around large urban areas. Major tourist destinations such as key historical spots, shopping centres are also huge drawcards. Business districts are attractive to those on business trips. Madrid is no exception to that rule. Bloomberg, citing a study by Idealista.com, Spain’s largest property website, pointed out that buy-to-let homes in Madrid offer higher yields compared to similar properties in Paris or Berlin. Such homes in the Spanish capital city offer gross annual yields of 4.1%, higher than those in Paris 3,3% and bettering Berlin’s 3.7%.

A real world example of the value that can be found in Spanish real estate - writing about Madrid, the Daily Mail cited a posting for a three-bedroom apartment in Alcobendas with a price tag of GBP £218,000 (USD $331,563). De Salas, known for luxury urban apartments, is selling a one-bedroom home in Salamanca for GBP £430,000 (USD $653,910). For rental rates, Lucas Fox International Properties has two villas at the barrio of Aravaca in Madrid, listed for lease. One property rents for EUR €5,300 (USD $7,028) monthly, while another one leases for EUR €8,500 (USD $11,271). At La Moraleja, the rental range is wider from EUR €1,350 (USD $1,790) to EUR €6,000 (USD $7,960).

Valencia A second option for property investors who cannot afford the price tags of homes in Madrid or Barcelona is the city of Valencia. Located on Spain’s Mediterranean coastline, the city is said to have the buzz of Barcelona but with half the population, and home prices start at GBP £120,000 (USD $182,846) for a small apartment not too far from the harbour up to more than GBP £1 million (USD $1.52 million) for a townhouse in the city centre. Places to look for include the Russafa, an old market district with Moroccan and South American influences and lots of bars and restaurants, the harbor itself where the F1 European Grand Prix is staged, Malvarrosa, Cabanyal and the beach area Playa de Levante. Rentals of studio units average between EUR €450 and EUR €600 (USD $598 and USD $799), while on the opposite end, 4-bedroom units rent from €850 to EUR €1,000 (USD $1,130 to USD $1,328).

Canary Islands One of the biggest tourist magnets in Spain is the Canary Islands because of its tropical weather. However, Aplaceinthesun.com noted that of late, the Canaries have not been as fashionable as a tourist destination as previoulsy because of the so-called 'cheap sun' nations, including countries in Africa. Fortunately for the property investor, the situation has made the Canaries a buyer’s market. The hot spots recommended by the website include Tenerife, the largest of the Canary Islands, and the most accessible. It specifically suggested looking into Playa de las Americas where prices begin at EUR €90,000 (USD $119,480) for a one-bedroom flat with swimming pool. The villas cost between EUR €180,000 and EUR €1 million (USD $239,000 and USD $1.33 million).

Other possible property locations are Adeje, Caleta and Playa Paraiso. At Playa de las Teresitas and San Andres, rentals are from EUR €195 (USD $260) a week for a studio unit to EUR €250 (USD $332) a week for one-bedroom units with sea views. The website also points to Lanzarote’s Puerto del Carmen and Playa Blanca for villas for sale. The website recommends that property investors avoid the area of Parque Naturelle in Fuerteventura since units there are hard to sell, but recommends to instead try Las Pergolas III at Las Dunas where three-bedroom units are being sold from EUR €200,000 to EUR €300,000 (USD $265,588 to USD $398,338). If Gran Canaria, which is known for small coves and long sandy beaches, is your planned market, the places to check out are Las Palmas, Maspalomas, Puerto de las Nieves and Meloneras. Other vital information that the buyer should know is that the VAT (Impuesto General Indirecto Canario) in the Canaries is only 5% and applies to new properties, which resale properties are taxed at a higher rate of 6.5% (Impuesto Sobre Transmisiones Patrimoniales). The Actos Juridicos Documentados or document tax is 0.75% of the property price.

Government push To help Spain’s property industry recover from the slump, the Spanish government has established a Public Rental Agency under the Housing Ministry. To encourage property owners to rent out their units, the agency introduced the Guaranteed Rental Scheme where property owners are guaranteed the market rental price minus 10% to represent cost. The PRA appointed agents throughout Spain to market the properties, which must be rented for 5 years. The scheme protects the owners from non-payment, damage to property and guaranteed 5 years rental period even if the tenant does not stay for 5 years. With Spain’s property market still recovering from the property bubble and the global financial market, the industry could certainly benefit from that push from the government as well as from private investors who have money to spare for buy-to-let properties. *Those interested in tourism statistics and resident in Southeast Asia will be delighted to know that Bangkok is now the most visited city in the world by international tourists, according to the third annual Global Destination Cities Index released by MasterCard. Bangkok beat London, last year’s No. 1 tourist destination, by less than 1%. Part of the reason for Bangkok’s increase in visitors is that tourism in Southeast Asia has surged among the region’s upper-middle class.

53


SPAIN UP DATE CURRENT PROPERTY TRENDS After suffering a slump in property prices the past few years as a result of the global financial crisis, Spain’s property market is showing signs of improving, according to international property firm Knight Frank. Investors are sensing a potential turnaround in the market, which means purchasing now is a good strategy to benefit from the up to 50% slump in property prices in the most desirable areas. An investment of EUR €500,000 or USD $667,326 on Spanish property by non-European Union nationals would grant buyers residency, under a new law passed by the Spanish Parliament.

PAELLA- This rich serving of seafood or meat, vegetables, beans, seasoning and white rice is a Valencian dish, although many non-Spaniards consider it as Spain’s national dish. The Valencian version’s complete ingredient list is made up of short-grain white rice, chicken, rabbit, snail, duck, butter beans, great northern beans, runner beans, artichoke, tomatoes, fresh rosemary, sweet paprika, saffron, garlic, salt, olive oil and water.

TO BE ENJOYED AT A BEACHFRONT PROPERTY IN MONTE PEGO, VALENCIA: Since the paella is a Valencia dish, it is best enjoyed while vacationing in one of the key R&R spots in Valencia, which is in Monte Pego. Found on the Spanish Mediterranean coast of Costa Blanca, feasting on paella becomes more enjoyable because of the panoramic view of the sea and mountains.

PROPERTY BASICS AVERAGE PRICE

EUR €3,630 (USD $4,808)

RENTAL YIELD

18.00%

RENT PER MONTH

EUR €1,423 (USD $1,885)

CAPITAL GAINS TAX

3.92%

Valencia, España

WHERE TO BUY Home prices in Spain went on a downward slide when the Spanish economy moved deeper into recession due to weak demand and tighter austerity measures put in place by the government. As a result, the general price index went down 10.8% in June 2012, compared to the same period in 2011. At the same time, house prices in Spain tumbled down by 30.4% from their peak level in December 2007. For foreign buyers, the best areas where to buy homes are those places hit badly by dropping house prices. Here are some of those areas. Madrid – Buy-to-let homes in the capital city offer higher yields compared to similar properties in the French or German capital city. Homes here offer gross annual yields of 4,1% higher than Paris’s 3.3% and Berlin’s 3.7%. Valencia – This is a second option for property buyers who cannot afford the pricey homes of Madrid or Barcelona. The city has the character of Barcelona, but half its population. Areas to look for property buys include Russafa, Malvarrosa, Cabanyal and Playa de Levante. Canary Islands – Offers tropic-like weather. Recommended hot spots in this buyers’ market include Tenerife, San Eugenio Bajo, Adeje, Caleta and Playa Paraiso. SOURCE GLOBAL PROPERTY GUIDE

COUNTRY INFORMATION OFFICIAL NAME

Kingdom of Spain

CAPITAL CITY

Madrid

CURRENCY

Euro

LANGUAGE

Spanish, Basque, Catalan, Galician, Occitan

TOTAL AREA

505,992 sq km

POPULATION

46,704,314

TIME ZONES

CET (UTC+1) Summer (DST) CEST *UTC+2)

DIALLING CODE

+34

GDP (Nominal; 2012 IMF estimate)

USD $1.352 trillion

GDP PER CAPITA (Nominal; 2010–2011 IMF estimate)

USD $29,289

HUMAN DEVELOPMENT INDEX

0.885 (Very high)

54

BUYING PROCESS One good thing for property buyers in Spain is that foreigners could buy and resell all kinds of properties – whether residential, commercial or land – with no limits. However, owning a property does not give automatic rights to live permanently in Spain if the buyer is not from a European Union country. To obtain permanent residence for people outside the EU, a bank account with a Spanish bank and with a minimum amount of USD $150,000 must be opened, plus one must own a business in Spain. When buying property, after agreeing on a price, ask the seller for proof of ownership of the property and if it is free of charges. Then check the deeds in the Registro de la Propriedad (Property Registry) to check if there are any outstanding mortgages. Under Spanish laws, debts are charged to properties and any outstanding mortgages are passed on to the buyer. If the property is debt-free, the Property Registry will issue a Nota Simple as confirmation, then the buyer

and seller will sing a preliminary contract, the Contrato privado de compraventa. The buyer is then requested to pay a 10% deposit of the purchase price, which the estate agent will hold in a bonded client account. Buyers are advised to deposit it in an escrow account which neither party can get until the sale is closed. Pay the balance of the purchase price and all fees after signing the Escritura de compraventa, which is equivalent to the Deeds of the property. A notary is required to witness the deed of sale, but the buyer should also get expert, independent advice to protect his interest. Be prepared to pay about 7.1% of the property value as the cost to register the property. The transaction should normally be completed in 20 days with 4 procedures. SOURCE GLOBAL PROPERTY GUIDE

GETTING IN VISA REQUIREMENTS EU residents could enter Spain without a visa. Most non-EU foreigners need a visa to enter the country. To acquire a visa, apply one with the Spanish Consulate in your home country before you leave for Spain. The consulate will grant you any of the following types of visas, depending on your purpose: student, worker, tourist investor. Those who are on short visit, students or diplomats are usually given Temporary stay visa, while those who will work or seek asylum will be given Residence visa. SOURCE EXPATICA

AIRPORTS AND AIRLINES Iberia is the flag carrier of Spain, but the country has 29 listed airline companies. It is one of the largest airlines in Spain, based in Madrid. In April 2010, British Airways and Iberia agreed to merge, making their combined operations the third largest commercial airline in the world by revenue, called International Airlines Group IAG. As for international airports, the most important ones are: Madrid Airport - www.aena-aeropuertos.es/ madrid-barajas/en Barcelona Airport – www.barcelona-airport.com/ Palma de Mallorca Airport - www.aena-aeropuertos.es/csee/Satellite/Aeropuerto-Palma-Mallorca/ en/ Malaga Airport - www.malaga-airport.net/ Gran Canaria Airport - www.aena-aeropuertos.es/ csee/Satellite/Aeropuerto-Gran-Canaria/en/

For more detailed guides, visit www.propertylife.asia/countryguides

© SYNES / FLICKR

FESTIVAL / DISH FOR YOUR BUCKET LIST:


“More golden than gold” Golden opportunities from INDIA not to be missed

FreeIon! ISS adM

Suntec Convention and exhibition Centre level 3 (Summit 1) 5 & 6 october 2013 • Sat 1pm to 7pm, Sun 11am to 7pm

Why visit the show?

Why invest in India Property?

§ The finest collection of India properties for sale § Interact with first class India developers face-to-face § Gain expert insights on the spot § Clear your doubts about property ownership in India

§ Fast emerging market and favourite investment choice for NRIs § Very affordable per square foot property prices § Tax redemption benefits for NRIs investing in India properties § High returns with impressive capital appreciation of double digit growth

For more information, visit www.propertyguru.com.sg/events-ips2 In Partnership With

Media Partners

Developers

and many more


IT'S IN THE GRAVY Rendang Curry has been voted one of Indonesia's most popular dishes according to CNN Travel. The secret is in the gravy which wraps and caressess the beef for hours until it provides a fragrant and satisfying meal. Will Indonesian property investors have the same patience when it comes to this exciting market?

I N D O N E S I A

Festivals galore

across the archipelago

W

hile doing these feature articles on countries that boast a variety of cultural and culinary festivities, the writer noticed that Indonesia has the longest list of festivals, at around 80, making this an enormously rich country when it comes to culture and cuisine, possibly the richest in Southeast Asia. Aside from an average of between two and four festivals per month on the Gregorian calendar, Indonesia still has a separate list of festivals that change dates or are based on the Chinese, Vedic (lunisolar), Islamic (lunar) and Balinese calendars. Given that large number, a quick smartphone app based calculation showed that the 80 days of festivities out of a total of 365 days a year in the Gregorian calendar means that around 20% of the entire year is taken up by celebrations of one type or another. I’ve booked my ticket already.

56

Certainly, those numbers make Indonesia a festivities hot spot for those looking for opportunities to enjoy new cuisines or wanting to soak in new cultural experiences. For reasons of space, PropertyLife simply can’t cover all the 80 festivals, so we just selected a few of the key celebrations that both Indonesians and visitors enjoy each year. Outside the usual holidays observed internationally such as New Year’s Day, Christmas and Easter, the list of public holidays in Indonesia includes some celebrations that are unique to the country and are based on the Chinese, Balinese, Buddhist and Islamic calendars.

Major festivals The first festivity celebrating the birth of the Islamic prophet Muhammad is also the first major festivity after the New Year.

On the Islamic calendar, it falls on the third month – the Rabi al-awwal – which ocurred on January 23 on the Gregorian calendar in 2013. It is celebrated with large street processions, the decoration of homes and mosques, distribution of food and narration of the life of the prophet by the recitation of poetry by children. The next one is Chinese New Year, which falls on the 1st day of the 1st month of the Chinese calendar, and this year, it was on February 10. Called Tahun Baru Imlek in Indonesia, the festivity is marked by family reunions when residents travel back home to celebrate the Lunar New Year. The reunions are preceded by cleaning of the houses to remove bad luck and to make way for incoming good luck, decoration of windows and doors in red colour paper cuts and couplets centred on the themes of good fortune, happiness, wealth and lon-

© OPPOSITE PAGE: JEDA / FLICKR; FROM LEFT: HYOH, CUMI&CIKI / FLICKR

With almost 80 annual festivals, Indonesia is the mother lode for those in search of cultural and culinary experiences. Bonus - it’s also a great place for property investment. BY VITTORIO HERNANDEZ


gevity, the lighting of firecrackers to drive away evil spirits and the giving of red paper envelopes with cash inside. The most popular food during the Chinese New Year is the mooncake, although meat dishes of pork and chicken are also found on dining tables. There are also fish, leek, dumplings, Mandarin oranges, melon seeds and of course, noodles. Meanwhile, residents of Bali, Indonesia, celebrate the Saka New Year through the Balinese Day of Silence, which was held this year on March 12. It is a Hindu festivity celebrated in the famous resort town of Bali, marked by silence, fasting and meditation. In contrast to the noisy Chinese New Year celebration, Nyepi values silence as well as other restrictions such as no electricity, no working. No traveling, eating or entertainment takes place. For Buddhists in Indonesia, the largest celebration is held on Buddha’s birthday, called Waisak. In 2013, it was observed on May 25. Similar to the way Hindus celebrate New Year, Buddhist observe this day in simplicity such as followers dressing in white, eating of vegetarian food and serving of sweet rice porridge. Since Indonesia is predominantly Islamic, the Muslim holiday of Eid al-Fitr or the Breaking the Fast, is celebrated to mark the end of Ramadan, the holy month for followers of Islam who fast from sunrise to sunset during this period. Similar to the Chinese Lunar New Year, Indonesians return to their hometowns during this period to celebrate with their families and at the same time seek forgiveness from their parents, in-laws and relatives. People dress in their best clothes while they share the Lebaran meal, which consists of special dishes such as ketupat, opor ayam, rendang, sambal goring ati, sayur lodeh and lemang. Ketupat is a type of dumpling made from rice that is packed inside a woven pouch made of palm leaf. Rendang is spicy meat dish with coconut milk and mixed ground spices such as ginger, turmeric leaves, lemon grass, garlic, shallot, chili and other spices. Sayur lodeh is a combination of several ingredients such as young jackfruit, eggplant, chayote, melinjo, long beans, tofu and tempeh, cooked in coconut milk and enriched with chicken or beef stock. These four are just the major festivals. As mentioned earlier, there are almost 80 other festivities such Indonesian Film

BALI BEST The charms of Bali are too numerous to mention. A flood of tourists requiring accommodation makes property investment extremely attractive.

Festival, Solo Batik Carnival, Tomohon International Flower Festival, Bali Spirit Festival, Jakarta International Java Jazz Festival, Bali Kite Festival, Bakar Tongkang Ceremony, Uler-Uler Ritual, to name only a few.

8 million tourists These festivities, plus Indonesia’s natural wonders, particularly its beaches in Bali, draw a significant number of tourists to Indonesia. In 2012, the country welcomed 8 million tourists, the majority from neighbouring Asian countries, plus visitors from Australia. Data from the country’s tourism authority showed that Singaporeans topped the number of visitors to Indonesia, followed by Malaysians, Australians, Chinese and Japanese. The sheer number of these tourists (which is steadily growing), as well as local travelers, means opportunity for those wishing to invest in property to service this market which requires accommodation. There are, of course, the traditional hotels, motels, inns and other usual tourist accommodations, especially in the city of Jakarta and Bali, however increasing numbers of travellers are interested in a more personal accommodation experience.

Buy-to-let opportunities Due to the strong demand in the housing sector, the Indonesian government loosened regulation for foreign ownership in

2012, allowing foreigners to own condominium units priced at least IDR 2 billion rupiah (USD $206,000). However, as the Global Property Guide pointed out, foreigners can only effectively lease, not own an apartment or condo unit, and then only for a maximum of 70 years. During this period, they must periodically renew their right to use the property. The regulation is based on a land use (hak pakai) period of 25 years, which could be renewed for 25 more years, with a final 20 years as a final hurrah at the end of the period. This opens the floodgates for foreigners to go into buy-to-let properties, especially in Jakarta and Bali. According to the Emerging Trends in Real Estate 2013 Asia Pacific report produced by the Urban Land Institute and PricewaterhouseCoopers, the capital city of Indonesia - Jakarta is the best place for property investment, topping 22 cities and dislodging more popular cities such as Singapore and Shanghai. Despite the maximum 70 years of property ownership that foreign property investors are allowed, those planning to engage in buy-to-let units will still find the effort worthwhile, especially given the prices as well as the potential growth and returns. Why? Because the selling price of apartments in the central business district of Jakarta, according to Global Property Guide, start from USD $1,300 to USD $1,830 per square metre, while average rental rate is USD $12.70 per square metre, translating into gross yields of 7.9% to 11.3%. For foreign investors who plan to buy in Bali, while apartment or condo unit prices are lower, ranging from USD $1,260 to USD $1,380 per square metre, gross yields are also lower at 3.9% to 5.5%.

57


In the Facebook page of the Indonesia Property Investment Guide, it listed two condotels that are recommended for foreigners seeking buy-to-let properties in Bali. The first one is at the Horison Sunset Condotel, located in Sunset Road, Kuta Area. It has a local access road that connects the resident or guest to other parts of Bali such as Kuta, Legian and Seminyak. Developers of the condotel guarantee buyers of units a minimum rental income 40% of the apartment’s base price during the first 5 years of hotel operations. The developers promised to advance the rental income for the first 3 years to allow the investor to enjoy investment return even before their units are ready. The operators also project that the owner would reach break even in less than 6 years since the price of well-managed Bali properties generally doubles in 5 years, on top of the 40% guaranteed minimum rental income. The other development suggested is at Mercure Condotel where the unit price begins at IDR 990 million rupiah (USD $89,720). The development is found at the intersection of Jalan Sriwijaya, Jalan Legian and Jalan Melasti and 10 minutes walk to Kuta Beach and 30 minutes walk to Double Six Beach. The Bali Property Blog wrote that among the most attractive sites in Bali are in Jimbaran Bay, Bukit area and Seminyak or Canggu. The blog explained that land near a beach is costlier than inland properties and would cost between USD $500 and USD $1,500 per square metre, while land in an up-market development area would cost about USD $300 per square metre.

Jakarta properties For foreign investors seeking properties for sale in Jakarta, Knight Frank has 27 properties on its list, located in Menteng Jakarta Pusat Jakarta, Menteng, Jakarta Selatan, Bintaro – South Jakarta, Jakarta Selatan, Gunawarman House, Sentul City Jakarta Selatan, Somerset Berlian Apartment, Casablanca, South Jakarta, Permata Hijau, Kemang Jakarta Selatan, SCBD Jakarta Sealatan Jakarta, Ampera Townhouse and Cilandak House. In addition there are 15 neighbourhoods which are particular focus areas, each suitable for servicing a different market segment.

58

JAKARTA PROMISE For savvy property investors Jakarta may present abundant opportunity. Look for new developments in the near future to make the investment potential of this city even more attractive.

Cilandak for young couples who want practicality, not pretension Cipete known for its mellow rows of sleepy house shaded by Cipete’s trees Kebaroyan Baru the choice of couples with young children due to its relative residential calm Kebon Kacang for sophisticated singles Kemang for expats Kebun Jeruk perfect for families Cinere for families that seek greenery, fresh air and respite from chaos in the capital Kuningan popular with expats Mampang for people seeking the best of both worlds Menteng preferred area of elite and diplomatic community Permata Hijau for families that have children Pondok Indah one of Jakarta’s poshest and most affluent residential areas Senayan also for young couples Senen for people who appreciate Jakarta’s landmarks Jl Sudirman for busy executives Like other buy-to-let properties in many Asian countries, foreigners who are considering these types of investments in Indonesia are advised to buy the smaller apartments, which are more popular among tourists and provide bigger yields. According to Global Property Guide’s figures, a 50-square-metre apartment in Jakarta that costs USD $108,400 would rent for USD $867 a month for an annual yield of 9.6%. The annual yields go down to 7.92% for an 85 sqm apartment, 7.05% for a 120-sqm unit and slightly go up to 7.96% for a 175 sqm apartment.

However, for the Bali villas, there is not much difference in yields for the 150, 250 and 350 sqm units at 4.87%, 4,72% and 5.09%, respectively.

Making the decision Given the popularity of the region, the laws of Indonesia regarding property ownership by foreigners and the cost, as well as yields on apartments in the two most popular areas in Indonesia, potential investors are also encouraged to pay attention to the experiences of others who have engaged in these types of deals. One good place to do so is through online forums such as the site share.trader.co.nz where a woman named Chrystia sought advice on buying or building a villa in Indonesia. One site member cautioned her, explaining, ‘Do you live in Indonesia? If not – why buy there? I’ve no experience of owning in Indonesia, but have had enough, or perhaps far too much experience as a residential landlord to know it’s a hands on game. It’s difficult to run residential stuff successfully from the next town, let alone another country, particularly where the laws and customs are unfamiliar’. One solution to that is to hire the services of a property management company. But the same forum member warned, ‘Forget property companies unless you have first hand knowledge of them. For every good one, there’s probably 50 or 60 that range from bad to rotten’. A common thread in their advice is for the potential investor to really be streetwise in making property purchase decisions, which is actually a sound advise whether the apartment you are eyeing is in a tropical paradise like Indonesia or in other areas halfway around the globe.

© OWIBOY / FLICKR

Recommended buys in Bali


INDONESIA UP DATE CURRENT PROPERTY TRENDS Over the past few years, Indonesia has indeed become a frontier market despite the government’s tight regulations on foreign ownership. Its appeal to both foreign and local players seems to only intensify, causing the market to be hyped and driving property prices sky high. In fact, during the second quarter of this year, Indonesia even beat Singapore in terms of house price growth rate. The latest report from the Knight Frank House Price Index showed that prices were up 12.1% year-on-year, putting Indonesia in the 7th place among 55 countries surveyed. Demand, on the other hand, is high as indicated in the property sales report for the fourth quarter of 2012. According to Global Property Guide, residential property sales rose by 26.7% from the previous quarter while small houses logged a 41% quarteron-quarter increase, which by far is the highest in the region. The burgeoning confidence of property investors can be attributed to a much improved investment climate in the country, which also bodes well for the country’s economy. The Wall Street Journal cited a report from Indonesia’s investment board that foreign direct investment for the April-June period logged a record-level increase at 66.7 trillion rupiah (USD $6.5 billion). Many analysts forecast that the positive market trend will continue for the remainder of 2013. Some also said that the price growth is likely to further surge to between 15 to 20% until 2014.

FESTIVAL / DISH FOR YOUR BUCKET LIST: If you think that Kentucky is the only place for the best fried chicken in the world, then you haven’t been to Indonesia. Ayam goreng, the Indonesian version of fried chicken, is one of the most cooked— and ordered—food in the country which is quite understandable given its crispy perfection. Containing of at least one or two chicken parts and infused with a flavorful mixture of spices, Ayam goreng is so juicy that it may require not only more napkins than the avergae fast food meal, but also an extra serving.

TO BE ENJOYED AT JAKARTA: A cozy flat in the bustling metropolitan of Indonesia is the perfect setting to enjoy the juiciness of ayam goreng. But to put a musical twist on your eating experience, choose an apartment, which is close to a Jakarta’s world-class jazz festival.

TOTAL AREA

1,904,569 sq km

REGION

South-East Asia

POPULATION

248,645,008 (July 2012 est)

TIME ZONES

UTC +8 to +9

DIALLING CODE

+62

GDP (Nominal; 2012 IMF estimate)

USD $894.854 billion

GDP PER CAPITA (Nominal; 2010–2011 IMF estimate)

USD $3,512

HUMAN DEVELOPMENT INDEX

0.617 (medium)

WHERE TO BUY Although tagged as the fourth-most populous country in the world, Indonesia is without a doubt still a favourite tourist destination in South-East Asia. Given the list of tourist’s attractions, tropical floras and faunas, unspoilt islands and breath-taking mountains that Indonesia has to offer, it’s hardly surprising that some tourists ended up residing here. While its tourism industry continue to boom, so too is the property market. And because of the robust demand in housing sector, the government has decided to loosen the regulation for foreign ownership. In 2012, the Indonesian government announced that foreigners are now authorised to own a property albeit limited to condominiums priced at IDR 2 billion rupiah (USD $206,000). The price tag is not a problem though because the boom in Indonesia’s residential market is also in part due to the record-level demand for mid-level and luxury property. The most sought-after places in Indonesia include: Bali – Long noted as the haven for both rich and middle=class citizens as the province features magnificent beaches, beachfront villas, world-class restaurants and bars, posh shopping centres and all the good stuff designed for high-end living. Jakarta – The capital of Indonesia and among the most preferred place to live in by expats, given the wide array of residential houses offered. Jones Lang LaSalle said that 2013 is a good year for Jakarta as it will continue to register positive growth in the housing market. In Knight Frank’s The Wealth Report 2013, Indonesia’s prime residential markets were the biggest performers in 2012, with Jakarta leading the pack with values surging 38% followed by Bali at 20%. According to Knight Frank, Jakarta and Bali benefited from the continued strong GDP growth (6%). It added that increased access for non-resident buyers could help sustain the trend though 2013. SOURCE GLOBAL PROPERTY GUIDE

BUYING PROCESS

PROPERTY BASICS AVERAGE PRICE

USD $2,099 psm (usually a 120-

RENTAL YIELD

9.31%

RENT PER MONTH

US$1,955 (usually a 120-sqm

CAPITAL GAINS TAX

20%

sqm apartment in premier city centres)

apartment in premier city centres)

COUNTRY INFORMATION OFFICIAL NAME

Republic of Indonesia

CAPITAL CITY

Jakarta

CURRENCY

Rupiah (USD $1 = IDR9,712)

LANGUAGE

Bahasa Indonesia

Can foreigners buy property in Indonesia? The answer to this is ‘it depends on the title of the land on which the property sits’. There are two fundamental rulings foreign property ownership in Indonesia: the Basic Agrarian Law of 1960 (UU Pokok Agraria Tahun 1960) and Government Decree #41 of 1996. The Basic Agrarian Law is Indonesia’s main law concerning land ownership and includes a section about ownership by foreign individuals and institutions. According to it, a foreigner who resides in Indonesia is allowed to own a residential property built on land with a ‘Hak Pakai’ (right of use) title. Further, Government Decree #41 of 1996 stipulates that the maximum period for ‘Hak Pakai’ ownership is 25 years, which can be extended for another 20 years. On this basis, a foreign individual is legally allowed to buy, for example, a house that is built on a single parcel of land, but they must convert the title of the property to a ‘Hak Pakai’ title to comply with the laws. Another option for foreigners is to use a local nameholder for the property, with whom the foreign buyer

For more detailed guides, visit www.propertylife.asia/countryguides

enters into contracts. If using a local nominee, the following documents should be signed with your nominee prior to the purchase: ➊ Mortgage Agreement. Cost: 1% mortgage value for Notary; 1% of total mortgage value for BPN land affairs office ➋ Power of Attorney. This grants exclusive rights to mortgager to release the mortgage ➌ Financial Loan Agreement ➍ Power of Attorney for all rights to the land ➎ Statement Letter ➏ Statement of Indemnity (for nominee). ➐ Power of Attorney for IMB ➑ Statement Letter ➒ Lease Agreement All transactions of land rights must be via deeds executed before a land deed official at the local office of the Pejabat Pembuat Akta Tanah (PPAT), where the land is located, and must be registered in the regional office of the National Land Agency. Although there is no regulation regarding language, it is recommended having contracts and agreements drawn up and executed in Bahasa Indonesia (or two languages) to prevent potential arguments that the local partner did not fully understand the content.

GETTING IN VISA REQUIREMENTS No visa is required for short-term business or holiday visits for citizens of Brunei Darussalam, Chile, Hong Kong SAR, Macau SAR, Malaysia, Morocco, the Philippines, Peru, Singapore, Thailand and Vietnam. Indonesia also offers Visa on Arrival (VOA) with a maximum stay of 30 days (although this can be extended for an additional 30 days). Requirements for the VOA include a valid passport with at least 6 months validity, round-trip airplane ticket and fees of US$25. Citizens from the following countries are eligible for VOA: Argentina, Australia, Austria, Algeria, Bahrain, Belgium, Brazil, Bulgaria, Czech Republic, Cambodia, Canada, Cyprus, China, Denmark, Estonia, Egypt, Fiji, Finland, France, Germany, Greece, Hungary, India, Iceland, Iran, Ireland, Italy, Japan, Kuwait, Laos, Latvia, Libya, Lithuania, Liechtenstein, Luxembourg, Maldives, Malta, Mexico, Monaco, New Zealand, Netherlands, Norway, Oman, Panama, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Slovak Republic, Slovenia, Spain, South Africa, South Korea, Suriname, Sweden, Switzerland, Taiwan PRC, Timor Leste, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States of America. Check with the Indonesian visa authority for verification at www.embassyofindonesia.org/consular/ visitvisa.htm AIRPORTS AND AIRLINES Air transportation in Indonesia serves as a critical means of connecting the thousands of islands throughout the archipelago. Jakarta’s Soekarno–Hatta International Airport ( jakartaairportonline.com) serves as the country’s main international gateway. Flag carrier Garuda Indonesia (www.garuda-indonesia.com) has regular scheduled flights from Jakarta to numerous cities across the country and around the world, including Amsterdam, Bangkok, Beijing, Guangzhou, Hong Kong, Jeddah, Kuala Lumpur, Melbourne, Perth, Seoul, ShanghaiPudong, Singapore, Sydney, Taipei, and Tokyo-Narita. Indonesia’s second busiest airport is Bali’s Ngurah Rai International in Denpasar. There are also regional airports in Surabaya, Yogyakarta, Bandung, Banda Aceh, and Manado. LAND Frequent traffic jams in major cities, especially Jakarta, are an indication of the increasing number of cars on the road versus the amount of new road construction. Buses and trains offer unreliable service and put foreigners at risk of pickpockets and muggers and generally should be avoided except for the most adventurous. Unless you live in Indonesia and are comfortable driving, take a taxi, bus, train or flight.

59


FEATURE OC TO BER — NO VEM BER 2013

Leave it to the Professionals

Global Property

Management Services It's best to leave the management of your buy-to-let property to professionals and really enjoy the opportunity to kick back and relax when you are making personal use of overseas vacation home. Managing a vacation property can not only be frustrating but by assuming responsibility for sourcing tenants you may just be doing yourself a disservice and not maximising your investment. BY VITTORIO HERNANDEZ

O

wning a property and living in it most of the time is one thing. But owning a property and renting it is another kettle of fish entirely. There is a vast difference between getting under the skin of a home and knowing the little idiosyncrasies of the property, or even the right people to call when things go wrong and managing an investment property when one is geographically removed. This situation is made even more complicated when owners are resident outside of the country. Most investors are today looking at properties as more than a simple aggregation of bricks and mortar which is supposed to deliver a return with metronomic regularity. This is simply not possible in today’s uncertain economic environment, besides which the reasons for purchasing an overseas property are often due to the fact that many investors want to offset the costs involved in financing their personal down time, hence the need for a rental income.

60

With investment imperatives in mind and taking into account the investment opportunities outlined in the fiesta destinations selected as focus areas in this edition of PropertyLife we have identified a list of some of the top property managers who can make the task of managing a vacation property for income generation if not a breeze, then at least a lot less of a burden than going it alone. So here we are with Investment Property Management 101 – a print and virtual course (if you’d like a soft copy of this article remember to visit the Property Life web site at www. Propertylife.com – copy the article and share – we encourage it). A very careful cost benefit analysis is required in order to make a logical decision whether or not you are in fact the best person to manage your own affairs when it comes to an overseas property. Although it is counter-intuitive there is certainly an argument to be made for handling over control to a third party. Besides relieving the owner of the repetitive and sometimes mundane tasks involved in managing properties such as dealing with inquiries or showing pro-

spective tenants the vacant unit, as well as overseeing the repair of leaks, implementation of pest control and overall security of the premises, etc etc etc ad nuseum having a professional property manager has other definite advantages. For one, it helps attract tenants because property managers are never too busy to answer frequently asked questions from those paying the monthly rent, or potential tenants. Handling frequently asked questions such as deposit terms, size of the unit, how many bedrooms, are pets allowed, if the pool service is available after hours and whether or not it is permissible to mow the lawn on a Sunday morning will eventually wear down even the strongest of psyches. A property manager can help save the owner significant amounts of money by ensuring that maintenance tasks are performed quickly and efficiently in order to ensure that tenants remain satisfied and pay rent regularly and without compliant. When all is said and done your investment property is required to deliver a return on investment, if it does not do this in an efficient manner then you may have a serious problem.


FEATURE O C T O B E R — N O V E M BER 2013

There are at least six tasks that a property management company or professional will do as part of their contract. These are: MANAGE FINANCE Takes care of handling all expenses related to building maintenance, repairs, taxes and advertising. MANAGE PROPERTY PROMOTIONS Advertises the property in newspapers, the Internet and other venues to find suitable tenants. The task covers showing interested renters around, receiving and processing applications, screening and running credit checks, and choosing the most qualified applicant. MANAGE LEGAL ISSUES AND TAXES This involves taking care of preparation of lease agreements, renting, building upkeep, complying with national and local laws as well as paying of taxes and other bills for the property. MANAGE TENANTS It is a wide task that includes finding tenants, checking their backgrounds, collecting the rent and resolving tenant complaints. MANAGE MAINTENANCE Besides keeping the building in good condition, the task includes ensuring that the property follows local health and safety regulations, regular maintenance of landscaping, heating and air conditioning, painting and electrical inspections. PREPARE REPORTS Includes balance sheets with detailed records of income and expenses as well as tracking of miscellaneous financial records. The next vital question when it comes to property management is how much will the service cost? Professional property management fees vary, but a good management company should be charging between 4% to 12% of the monthly rental. Any more and you’re probably being ripped off, any less and neither you nor your property will be getting the required levels of attention. For that amount, a property management company could offer inclusive packages or opt to charge separately for each service rendered. The fee structure and the scope of services covered must be itemised

in the contract between the property owner and the property management company – this is for their protection of both parties. It should be noted that this Property Life list is far from exhaustive. We have selected some of the most recognised names in the property management game while taking into account some of the markets that we have spoken about in our leisure and lifestyle feature. Some of them are local companies, while others are multinationals with property management services in different countries across many continents.

1 VIETNAM WMC GROUP The Windsor Property Management Group Corporation (WMC) is one of the biggest hospitality and property service companies in Vietnam. Its clients include restaurants, hotels, services apartments and commercial shopping centres. The bulk of its clients are in Ho Chi Minh City (the former Saigon). Services offered include asset management, brokerage, marketing, sales, finance, IT and human resources. WMC’s portfolio includes the Mayfair Suites, Sherwood Residence, Windsor Residences, Amigo Grill Restaurant, Nguyen Hue and Kissho Restaurant.

Savills is found in 12 territories and countries in the Asia-Pacific region, namely: Australia, China, Hong Kong, India, Japan, South Korea, Macao, New Zealand, Singapore, Taiwan, Thailand and Vietnam as well as in Europe, the Americas and Middle East.

2 THAILAND DTZ This property management firm has a 225 year track record However, in Thailand, it is a relative newcomer, having begun operations in 2000. It is headquartered in Bangkok headquarters. Many property management websites merely list their fields of expertise and some clients to convince future clients to sign in. They seem to forget that the best way that any potential client can evaluate their success in sometimes complex and culturally sensitive markets is through client testimonials. DTZ is not afraid to list its successes in the Thai market. On its website it lists the property management services it provides the 6,100 sqm ‘The Signature Residence’ in Bangkok in terms of a two-year contract it inked with project owner Khun Boonkrong. DTZ is present in 208 cities across 52 nations, and it holds on to the distinction of being first to establish a permanent operation in the Middle East in 1975.

SAVILLS The company has experience managing properties not only in Vietnam, but also other nations in Asia Pacific, covering 65 million sqm of prime commercial, luxury residential, shopping centres and industrial properties. In Vietnam, it currently manages about 1.1 million sqm of properties made up of 500,000 sqm prime commercial space and more than 600,000 sqm luxury residential properties. In its website, www.savills.com.vn, Savills lists building management, facilities and operations audits, financial management, pre-management consultancy and technical services as its areas of expertise. Savills has more than 50 years of property management experience in Vietnam and currently handles around 50 properties, which are managed by the company’s over 350 professional property management staff, including 10 expat specialists.

PHUKET ISLAND PROPERTY SERVICES CO. The company specialises in management of buy-to-let properties in Thailand’s most popular beach destination, particularly villa and apartment rentals. But beyond looking for short- or medium-term tenants, finalising holiday lease contracts and maintaining the property, PIP also supplies services that are specifically tailored to ensure that holiday makers enjoy a carefree R&R. These services include airport transfer, car rental for tours and party organisation for the vacation rental properties handled by PIP, including those in Baan Chai Nam, Sunn Springs Estate, Clun Lersuang, Ocean Breeze, Kamala Apartments and the Laguna Villas and Townhomes. More information about PIP’s property management services in other villas and apartments in Mai Khao, Nai Yang, Nai

61


FEATURE OC TO BER — NO VEM BER 2013

WANT TO ENJOY THE VIEW? Relax and get a property management company on board.

4 MEXICO

Thon, Patong, Karon, Kata, Nai Ham, Rawai, Chalong and Kathu in Phuket can be found at the company’s webpage www. pipsphuket.com The properties that Luxury Beach manages surround Riviera Nayarit an area renowned for allowing visitors and property owners access to the nearby mountains, rivers, jungles and beaches.

3 CARIBBEAN TERRA CARIBBEAN BARBADOS The company’s website (www.terracaribbean.com/barbados/Property-Management/) nails to colours of Terra Carribbean to the mast. The company claims that achieving the identified objectives of the property owners in terms of income generation, value enhancement and personal enjoyment as its objectives. Terra Caribbean Barbados offers more than just leasing buy-to-let properties Services include offering property for sale, with focus on highly desirable locations

62

such as South View, Fort George Heights, Sapphire Beach, Somerley, The Palisades, Atlantic Shores, Prior Park, Apes Hill Club, Royal Westmoreland, Sandy Lane Golf Estate and Port St. Charles. Testimonials indicate that the company enjoys a good reputation. This statement from Don Marshall from the US is one such evidence. “Since I live in the US I need a local property manager to interface with short term vacation renters and help keep the property maintained to its original high standard. I have found that Terra performs both of these functions extremely well and keeps me advised appropriately. I use a different property manager for another resort property that’s much closer to me, about 2 hours by car, but I feel much better informed about the status and management of my Sapphire Beach property because of Terra Caribbean.” Besides Barbados, Terra also offers property management services in two other popular Caribbean tourist destinations – Grenada and Trinidad.

This well know (and well respected) international real estate management services company, offers a number of services in Mexico. The Colliers team is made up of property managers, building engineers, accountants, contract administrators and service staff with specific skills in three core areas: managing physical space (which covers numerous services ranging from landscaping to janitorial services), tenant relationships and building brand and positioning. Citing an example of its tenant relationship, Colliers recalled the case of a property manager who noticed the frequent scraping of a tenant’s sports car that had a low-undercarriage. The culprit was a speed bump leading into the garage. The Colliers team reduced the bump’s height to the delight of the grateful tenant. Besides Mexico, Colliers International is found in 61 other nations with 482 offices manned by 13,500 professionals and staff, plus 5,100 brokers. As one of the world’s largest property management concerns the company manages a total of 1.12 billion square feet of properties.

LUXURY BEACH The company, based in Puerto Vallarta, Jalisco, offers property owners a turnkey property management service. This dedicated service ensures that the property is always ready if they opt to rent it out or show up in Mexico without prior notice, committed to some leisure time.

© PHOTOS COURTESY OF UNTER SOTHEBY’S INTERNATIONAL REALTY

COLLIERS INTERNATIONAL


FEATURE O C T O B E R — N O V E M BER 2013

Luxury Beach (www.luxurybeach. com/property-management) promises clients that it will take the stress out of vacation rental property management with its trained associates who are on call to coordinate rental bookings, inspect and prepare the property before the owner or guest arrives. They will ensure that the interior and exterior of the properties are maintained at excellent levels, as well as providing other standard management services.

LUXURY BEACH CARIBBEAN PROPERTY MANAGEMENT, INC. The company name can be a bit confusing, however Caribbean is actually based in Miami and manages properties in Florida. Caribbean Property Management (www.caribbeanproperty.cc) boasts over 21 years experience in property management, focusing specifically on condominiums, as well as providing services to homeowner associations, master associations, other highrise buildings and upscale communities. One extra service offered by the firm is 24-hour emergency services. The company believes that each community has different needs and it therefore tailors its personalised services to what the client requires in close consultation with the client. Caribbean has CAM licensed managers, in-house independent certified public accountants, building engineers, violation compliance managers and field supervisors, plus support staff and bilingual assistant association managers and secretaries.

INVESSCOMM Property owners in Florida must fulfill a comprehensive list of requirements in order to engage in short term rental requirements. Services such as those offered by Invesscomm can be invaluable in removing much of the stress involved in engaging in rental activity. The management of the mundane paperwork involved in day to day regulations governing fire extinguishers, smoke alarms, double locking systems for exterior doors and rate cards would definitely assist the owner in first securing the necessary licenses from the State of Florida and the Department of Regulation before they could lease their homes.

Invescomm believes that by offering services such as lawn, pool, pest control, house cleaning and maintenance, a buy-tolet property’s value would be maintained and enhanced. Among the communities managed by Invescomm are the Solterra Resort, Lake Buena Vista Resort, BellaVida Resort, Mirabella Residences, Wyndham Lakes: Preston Pointe, The Palms, Waterson, Encantada and Veranda Palms.

5 S PA I N TOPSFORPROPS The property management, property care and cleaning services offered by this firm are specifically tailored to cater to the needs of customers who own buy-to-let homes on the Torrevieja and Costa Blanca. Topsforprops (www.topsforprops.com) promises regular inspection of properties under its care on a weekly, fortnightly or monthly bass, checking of all utilities, ventilation of the unit, visual inspection of property, recommend contractors, watering of indoor and balcony plants, checking of on-site mailboxes and meet and greet services of tenants/guests.

QUATTRO PROPERTY MANAGEMENT Like Topsforprops, Quattro is a believer in inspections as a vital part of its property management services. It has an eight-point service, which Quattro (www.quattropropertymanagementspain.com) implements when visiting properties unoccupied for a long time, particularly when tenants are about to arrive. These are the opening of windows to air the unit, checking for signs of humidity, flushing of toilets and running of taps, checking for leaks, operation of light bulbs and replacing them when needed, overall condition of doors and windows, condition of furnishings and fitments and evidence of vermin entry. Besides the preparation of buy-tolet homes before the arrival of tenants, Quattro also offers minor and emergency repairs, installation of light fittings and ceiling fans, alarms, air conditioners, and

kitchen and bathroom improvements. More complex services such as comprehensive interior design, painting and decorating as well as property design and furnishing are also on its menu of services. The partners behind Quattro, who used to be bankers, honed their expertise in property management by refurbishing 20 properties to exceptionally high standards within five years in the Bournemouth area.

6 BELGIUM ZILLOW Zillow (www.zillow.com) is online real estate database founded by former Microsoft executives in 2005 and has operations in Belgium. As a full-service real estate company, it has a wide range of services beyond property rentals. Unlike smaller property management companies that are concentrated on several tourist-rich areas, Zillow has a wider reach and its Homes for Rent service includes houses, apartments, condo units and townhouses in any area. Its website has filters based on price, beds, baths and even rentals that are pet friendly or with parking. Zillow has specialised service for homebuyers, renters, home sellers, homeowners and professionals.

REDEVCO BELGIUM In 2001, Redevco handled transactions worth an estimated EUR €1 billion. This is certainly no lightweight operation. When it took over the GIB Immo property portfolio, Redevco was catapulted to the top 5 real estate investment companies in Belgium. Redevco (www.redevco.com) manages retail properties, offices and logistics centres. At present, Redevco has invested assets worth EUR €2.06 billion (USD $2.73 billion) with 348 properties in 228 locations. Half of its properties are in Flanders, another 29% in Walloon and 21% in Brussels. Besides Belgium, Redevco operations can also found in France, Germany, The Netherlands, Spain, Portugal, Switzerland and the United Kingdom.

63


B a l a n c e uest Q for

T H E

F

or those of us surrounded by the edifices of the urban jungle our homes can be havens of tranquility and calm. Sadly however city living has a way of distracting us from the important things in life such as family, friends and our chosen leisure activities. It is perhaps not as easy as it once was to make the time to enjoy what many regard as an ideal lifestyle. For many urbanites it is a question of what we are prepared to sacrifice, is it the company and enjoyment of your family? Or would we prefer to give up those moments of solitude that we all treasure. Thankfully there are developers who are making it easier than ever before to cast of the shackles of our urban lifestyle and retreat into a sanctuary of safety, peace and quiet and quality family time.

These developers are seeking to provide properties that feature opportunities to balance of the pressures of work with a playful sense of fun. The latest developments in Singapore have also sought to provide an environment that is conducive to achieving this balance. In most cases this balance is made possible through the integration of plant installations, landscaping and waterscapes. As well as an innovative use of space. One such development is Waterscape at Cavanagh where the developers claim to have found the optimal balance between serenity and functionality through the provision of value added lifestyle features such as an in-house spa (with hydrotherapy facilities) and nature trail. An added bonus is that in keeping with a commitment to a balanced lifestyle the developers, Hiap Hoe Ltd have also made it easy to engage in a little ‘retail therapy’. The development is only five minutes walk from Clarke Quay and the Orchard Road shopping belt.

An urban sanctuary featuring a balance between the calming effect of water and opportunities for relaxation. AN INTEGRATED APPROACH

The residents at Waterscape will be able to enjoy a lifestyle that includes exposure to the sights and sounds of nature. State of the art facilities provide a work / life balance.


FEATURE O C T O B E R — N O V E M BER 2013

Chinese investors “Buying the farm”in Australia VIEWPOINT AND ANALYSIS BY RODNEY PRESTIA

© OPPOSITE PAGE: NICHOLAS T / FLICKR

E

very Country has its own colloquial expressions which are part and parcel of the national ethos. For many language and slang are intertwined with the national psyche, it is part of who we are. In Singapore, happy cries of “ok la “ or “can”and “cannot” fill the air at social and even in some business occasions In Australia everyone knows that Aussies are prone to a ‘G’day’ on the way to the office each morning. There are also linguistic hangovers from the colonial period (sorry blokes, but it’s part of your history) and one of the most colourful must be the expression “Buying the Farm”. You’ll find this charming saying in most countries that were at one time or another part of the British Empire. It seems to have it’s origins in the practice of British serviceman settling down for a welcome retirement after therir times in far flung countries at the behest of either King or Queen and country were complete. Of course, being British these gentleman had the good manners to shuffle off this mortal coil posthaste after taking up their country seats and thus the saying "Buy-

ing the farm" became synonymous with keeling over stone dead. Of course Aussies being who they are they have their own version of where the expression came from. In the Australian story ‘buying the farm’ was the creation of Aussie pilots flying during the second world war. The reasoning went something along these lines “ if something from the private sector crashes on to a farm - like a military plane, the government ‘buy the farm’ as in the land that it destroyed. The pilot is dead because of the impact...” Sounds dodgy, , but seeing as the origins are lost in the midst of time, why not let the Bruce and Sheila throw their theory into the mix, the more the merrier. All this linguistic history is really a long way of getting to the point that ‘buying the farm’ and the death of farm ownership in Australia is getting Australians a bit hot under the collar. It seems that the 21st century sees the Chinese accused of burying native Australian farmers by literally ‘buying the farm’, highlighting the issue of foreign ownership of Australian rural property. Debate is now raging in the land of the Wallaby and the Numbat. There are murmurings of discontent spread-

ing like a bushfire across both the outback and the coastal belt as Chinese investors reportedly unhitch their cheque books and reach for their pens in preparation for taking ownership of $500 million of Australia’s prime farmland. New reports have surfaced that both private and state backed Chinese investors want to buy more than 100,000ha of farmland with the stated aim of producing a cross section of agricultural products from wool to milk. Liberal Senator Bill Heffernan said Australia was now the laughing stock of the investment world due to its slack regulations governing foreign investment. “The concept of sovereignty has changed,” Senator Heffernan said. “Now a country can use a chequebook, where it traditionally used armies, navy and air force, to take over another country’s sovereign assets.” Senator Heffernan said other countries had tightened investment rules in response to looming food and water shortages. The Senator accused Australians, especially politicians of focusing only on “tomorrow’s headlines not the country’s future”, and charged that they were “asleep at the wheel”, he said.

65


FEATURE OC TO BER — NO VEM BER 2013

“This is not xenophobia or Hansonism... the slackness of our regulators puts Australia’s long-term prospects at peril,” Senator Heffernan said. Senator Hefferman claimed that foreign investment, where prices paid are generally above their value, would distort markets and threaten family farming. Assistant treasurer Mark Arbib said he understood the concerns “and that is why the Government moved to strengthen transparency of foreign ownership of rural land.” National Farmers’ Federation policy general manager Charlie McElhone was concerned state-owned entities may look to secure food supplies from Australia in a closed supply loop, distorting local markets. However, there are some dissenting options as regards the impact of foreign ownership of Australian land, with some farmers welcoming the increased interest in foreign ownership of Australian Agricultural assets. Spokespeople from the Australian diary industry, which according to many pundits is an habitual underperformer, have stated that foreign ownership is imperative for the industries survival. Several players in the industry say that they have plans to bypass traditional bank lending by forging alliances with international investors in order to support dairy farms. As the number of diary farms under administration or external bank control in the Australian state of Victoria and other parts of the country continues to rise, Murray Goulburn Co-operative General Manager of Shareholder Relations, Robert Poole said external, especially foreign capital was emerging as a lifeline for embattled farmers. The co-op has launched a sale and leaseback scheme called MG Partnerships, where it uses its scale and status in the industry to attract offshore equity funds to purchase farm land that is then leased back to suppliers and shareholders. “A lot of the banks are still funding agriculture like they did in the 1950’s and 60’s, with 50 per cent equity and the remaining share funded by mums and dads borrowing money,” Mr Poole told The Australian on the sidelines of PPB Advisory’s inaugural agribusiness conference. “That is, I think, going to rapidly change and I think the banks are going to be involved in that change, because the external capital is inevitably going to come to Australia.” His comments come after former Australian Securities & Investments Commission Chairman Tony D’Aloisio called on the big

66

banks to change their mindset when lending to the agricultural sector, urging them to view farm debts as less of a problem and more of an opportunity. Mr D’Aloisio, who is now a PPB director and president of the Winemakers’ Federation of Australia, was supported by PPB’s Australasian agribusiness team head Greg Quinn. Quin remarked that Australian banks were becoming more “nervous” about their ethical obligations to the sector, given the increased focus in recent months on the opportunities for agricultural assets as the gov-

We have strong interest at the moment from offshore. The sector is looking good. The Australian funds are starting to look at it too, now. ernment officially declared the mining boom at an end. But Elders’ Australian network group General Manager, David Goodfellow told the PPB conference that the banks had been making some “very sensible decisions over the last little while” in dealing with agricultural properties. “There is every reason there could have been panic and mayhem in the north (around the issue of failing farm operations)” he said. “But generally the response from the banks has been mature and orderly. It could have got completely out of control. I genuinely take my hat off to the banks for their behaviour through these times.” Two of Victoria’s biggest dairy properties have collapsed this year. In May, Hines

Dairy Farm was placed into receivership after the director of the company put its operation into voluntary administration with PPB. This followed the placement of the Alan Fisher Pastoral Company into administration in February. “We’ve had some large dairy farms go into administration this year. We understand that sometimes happens,” Mr Poole said. “But we would encourage the banks to be careful, act early, support the farmers absolutely where they can.” Mr Poole said the co-operative had now sold a dozen dairy farms to a European superannuation fund under MG Partnerships and was talking to more European funds and others in Asia. “We use our status to bring external funding into the sector, farmers bring projects to us where they want to buy a farm next door through equity rather than debt. And we marry that up -- we sit as a corporate counter-party in the middle,” he said. “We have strong interest at the moment from offshore. The sector is looking good. The Australian funds are starting to look at it too, now.” He said the funds were receiving returns of about 5 per cent per annum plus capital growth. Mr Poole also revealed the co-op now had more than 30,457 visa applications under management for its suppliers after employing a registered migration agent earlier this year to develop domestic and international workforce strategies for dairy farmers. “We are trying to do everything we can to stimulate growth in the farm sector. Our biggest challenge is lack in supply -- if we are going to be a serious player in Asia in the next 10 years, we need to go from 9.5 million liters up to probably 15 million. And to do that we have to generate cash in the farm sector,” he said. Many industry oundits believe that the current state of Australian property ownership law means that the agricultural sector is effectively becoming some sort of gigantic yard sale. This writer was leafing through the Queensland Country Life magazine while on a trip from Brisbane to Sydney and was startled to see an advertisement with a banner headline reading “Australia is up for Sale!“ Is this a colourful version of the state of agricultural property in Australia, or is it just another example of the use of creative hyperbole in advertising? Whatever the truth Australian Agricultural Real Estate Agencies are taking little notice of the increasing domestic concerns surrounding foreign ownership and now ac-


FEATURE O C T O B E R — N O V E M BER 2013

tively seeking Asian capital, as evidenced by this advertising. Landmark-Harcourts is one of several national Australian rural real estate firms that are setting up shop in Asia with the single objective of selling Australian farmland and real estate to whoever has the money. What makes this even more ironic is that Landmark is all that is left of what was originally the biggest farmer-owned co-operative in Australia. It was formed by West Australian farmers in 1914 as the Westralian Farmer’s Co-operative. Its main objective was to support regional farming operations, through the provision of services and merchandise to farmers, many of who were returning from the Great War. In 1924 alone over 9 million acres of land in Western Australia were acquired or set aside for soldiers returning home from the horrors of the trenches of Europe. This farmer-owned co-operative dealt in wool and livestock and during the Great Depression set up one of the first wheat pools in Australia in 1935. Landmark, now a faded and distant echo of the original Westralian Farmer’s Co-operative, seems today to be focused exclusively on chasing down the international funds that are changing the character of Australia’s agricultural property holdings. There are many who believe that this is the nature of international capitalism and the way that global efficiencies are created. However, this trend is also making landowners and the politicians who rely on their support uneasy. It’s no secret that farming in Australia today from horticulture, to livestock to crops is going through some times. Debts are high, land values are falling and banks are casting a jaundiced eye as debt-to-equity ratios inevitably change. The Australian national dairy industry is currently in trouble; of that there is no doubt. A mixture of poor seasons and low retail prices which are seeing supermarkets selling milk for less than bottled water and cola is eating away at the sustainability of the industry, at least as it is currently structured. It is a sad fact that the suicide rates amongst dairy farmers are becoming a matter of real concern. Accusations fly that politicians involved in electioneering (from all political parties it must be said) are more focused on kissing babies and photo opportunities than facing the real issues, including those confronting the Australian farmer. Prior to 2011 northern cattle producers from Queensland to Western Australia exported over half a million cattle every year to

Indonesia. All it took was one national television program showing animal cruelty in a backyard Indonesian abattoir, and what some would label a naive and inexperienced Australian government stopped trade with that market seemingly overnight. The Indonesian government punished Australia and many cattle producers went bankrupt. Now, nearly three years later with the price of beef skyrocketing in Indonesia the live trade is starting again but for many cattlemen and women in Australia, it’s simply too little, too late. Even with the value of the Australian dollar steadily falling from the heady days of A$1.10 to the greenback, it doesn’t look like anyone in farming (wheat farming especially) is going to make ends meet this year, let alone put something away to weather the tough times. Too many debts, and for many in Western Australia, the country’s main producer of agricultural exports, not enough rain. Put all of that together and mix it with the average age of Australian farmers which is now close to 60, with young blood not entering a tough industry, characterised by debt and those in control at boith the regional and national level should be getting very worried indeed. If you’re getting on in years and you want what time is left to be without the anxiety of farming, any buyer is better than no buyer at all. Who can argue with that? This is only one of the reasons that there is a marked lack of reluctance to sell to Asian investors, although it is quite disheartening to see third and fourth generation farmers mothballing equipment and padlocking paddocks. The truth of the matter is that most of them are left with little or no option due to the lack of support from Australian financial institutions and Government. Reports state that Landmark’s portfolio for the attention of Chinese investors is is overflowing. The organisation now has over 60 properties of various types listed. Not all of these properties are farms, reflecting the breadth of Asian interest in Australian property across the board. The questions most Australians ask is ‘does the federal government care?’ To the observer it certainly looks as if Canberra has other fish to fry. Australians are in the middle of the longest general election campaign on record and agriculture is not on the radar. Both political parties have used the ‘out of sight, out of mind, approach to the questions around the sustainability of Aus-

tralian agriculture and placed it in the — “too hard” basket. An aging demographic of farmers leading forced into retirement, Asian money looking for a home in an increasingly fluid international investment environment, profiteering, a willfully dismissive government or simply capitalism at work? Choose your poison. Whatever the reason it appears that the Australian agricultural sector is in very real danger of ‘buying the farm’, at least in its current form. Editors note: About a decade ago I was speaking to an grizzled older farmer while surveying a field of maize growing on one of the largest farms in South Africa. After some discussion about the state of farming during what was then one of the longest droughts in the recent history of the country he turned to me with a smile and said; “farmers, always complaining. There’s either not enough rain or too much’. Now whether or not you agree with those sentiments there seems to be something deeply wrong with the Australian agricultural sector, a malaise that transcends drought or the threat of flooding. The question of property ownership has never been more potentially divisive than when it touches on agricultural land. For many this industry is both the backbone of a country and the anchor point for a national psyche, one that in Australia values the concept of the ‘fair go’ and the mental construct of the rugged Australian ‘can do’ attitude, epitomised by the image of the Outback farmer, sheepdog by his side, wiping his brow after a long day coping with some of the world’s most trying conditions. The new Australian government would do well to pay close attention to the warning signs coming out of the agricultural industry - the attitude of a nation of very fickle voters may be more strongly in tune with these mental constructs than they realize and the perception of trouble in agricultural property ownership may spell trouble for a new government.

RODNEY PRESTIA is an Australian property expert who previously owned and operated one of the largest real estate agencies in Australia. He is currently the CEO of Dynamic Joy Investments. During his time as an Australian licensed real estate agent and accredited auctioneer, Prestia broke several records with regards to sales in the Sydney property market. He has built a business throughout Asia by doing one simple thing: telling the truth about the Australian property market – the facts, the trends, the growth areas, and locations of where to invest and to avoid.

67


FEATURE OC TO BER — NO VEM BER 2013

The most architecturally exciting cities in the world

M

odern life is filled with stress, from traffic congestion, air and noise pollution to the inevitable delays that plague urbanites the world over when accomplishing seemingly simple tasks such as obtaining a cup coffee we are bombarded by sensory input that seems to heap misery on our increasingly overburdened shoulders. But for the lucky few, the sheer beauty of the cities that they call home offsets the strain of living within the boundaries of increasingly chaotic urban sprawl. These cities boast architecture that sooths and uplifts and makes owning property in these oasis of architectural splendor both pleasant for homeowners and certainly worthy of evaluation by those in search of investment property. The idea that property investment can deliver superior returns based on not only the architecture of the host building itself, but is considerably enhanced by the architectural excellence of its surroundings is hardly revolutionary. There is after all something to be said for living adjacent to Central Park, rather than in rather than in one of the neighborhoods of New York which may not have a high concentration of prime real estate. There are however cities that feature architecture that raises the tone, feel and general quality of life of those who live in these densely populated urban sprawls. It is no coincidence that apartments and landed property in these cities boast excellent returns on investment. These cities have a track record of delivering superior returns over the medium and long term. Barring unforeseen political or social upheaval these are cities that seem set on continue to deliver exceptional value. The key to leveraging the architectural standing of these cities seems to identifying those cities where a existing supply of historically and architecturally important legacy buildings are being supplemented by new

68

developments and infrastructural upgrades. This is a combination that may provide investors with significant value. The following are some of the cities that investors may warrant a closer look, along with insight into what may make them worthy of closer attention by investors – or caution against investing in properaty for rental or for those in search of superior returns. Chandigarh, India

Mid Century Modernism Shortly after India’s 1947 partition, Prime Minister J. Nehru tasked Swiss modernist architect Le Corbusier with designing an organized, progressive city. This was to be a city that epitomised the new India and would represent a clean break with the past. Its planned

WHITE CITY

Housing prices in Israel as a whole have continued to rise, while those in Tel Aviv have seen a slight drop during 2013. The latest annual survey of international real estate ranks Tel Aviv up by three places on the most expensive cities ranking as far as residential properties are concerned. As of last September the average price of an Israel real estate apartment in the city was USD $7, 020 per square meter, more expensive then Sydney and Amsterdam.

Tel Aviv, Israel The Bauhaus Movement Recognised as a UNESCO World Heritage Site, Tel Aviv’s ‘White City’ contains 4,000 International Style buildings, many of which were built in the 1930s and 1940s. To accommodate the influx of Jewish immigrants fleeing Europe, German Bauhaus-trained architects integrated the modern style’s affordable and functional building techniques with curved lines and the signature white colour, which is well suited to the climate and ethos of Mediterranean living. This has created a one of a kind oasis of historical architecture in a city which is today beginning to be characterised by the mega blocks that are becoming increasingly common across the globe.

Florence, Italy Renaissance Architecture It’s hard to escape Renaissance aesthetics in Florence, the birthplace of the late-14th-century movement. The era’s embellished but symmetrical and geometrical structures— columns and domes—and emphasis on realism and the human form departed from the irregular and severe lines of the Medieval period. They’re most visible at Florence’s Duomo and Basilica of Santa Maria Novella. The latest consolidated figures that are available for the wider Italian market show that Italy’s house price index fell by 4.64% in 2012. This follows almost four years of house price falls.

© ISRAEL TOURISM / FLICKR

Eye candy

supergrid, exposed masonry and concrete, and the eccentric sculpture-work that peppers Chandigarh has made the city a study for planning and design students around the world.


FEATURE O C T O B E R — N O V E M BER 2013

SA LE P R IC E TRE NDS I N D E RA BASSI : Multistorey Apartments

Residential Plot

2,600 20,000 R.s./Sq-Yrd

R.s./Sq-Yrd

2,400 15,000

10,000

2,200

2,000

5,000 Apr-Jun '12

Jul-Sep '12

Oct-Dec '12

Jan-Mar '13

Apr-Jun '13

1,800 Apr-Jun '11

Oct-Dec '11

Oct-Dec '12

Apr-Jun '13

Quarters

Quarters

Upper Range Value

Average Range Value

Lower Range Value

The region is undergoing somewhat of a rennaiscance. Dera Bassi is a city in the state of Punjab, India located on the Chandigarh – Delhi National Highway, 20 km from Chandigarh. It is strategically located near the boundary of Haryana, Himanchal Pradesh and Union territory of Chandigarh. The nearby sub town Lalru was once a famous market for red chili powder. The city and nearby area has eight engineering colleges, B.ed, paramedical and management Institutes.

From 2000 to H1 2008, house prices surged by 85% (53% inflation-adjusted). However, house prices started to fall in H2 2008, mainly due to the global financial meltdown. From H2 2008 to 2011, house prices fell 8.6% (-14.3% inflation-adjusted). In the fourth quarter of 2012, residential property transactions fell by 30.5% from the same period last year. For the whole year of 2012, property transactions fell by 25.8% yo-y to 444,000 units. To makes matters even more challenging for those wishing to invest in Italy’s (including Florence’s) proerty to rent market it is extremely difficult to obtain attractive returns from the rental market. Renting is unattractive for Italian landlords (and international property investors looking for rental returns), because of rent controls and other restrictions. Rental properties have long yielded poor returns. Properties generally have low yields of 3% to 5%.

House Price Change, Annual (%)

'11 Nominal

'12 Real

2 1 0 -1 -2 -3 -4 -5 -6 -7 -8

SOURCE EUROSTAT

The standard contract allows free negotiation of the initial rent, but commits the landlord to a four-year contract and gives the tenant the option of extending for another four years. Rents can only be increased annually by 75% of the cost of living index; i.e. if inflation is 2%, then you can only increase your rent by 1.5%. In addition the increasing numbers of Italians who own their homes means that a ready market of domeestic consumers ready to rent is largely absent. 80% of all homes are owner-occupied, especially in the south and small towns, up from 59% in 1980.

Marrakech, Morocco Moorish Architecture The presence of riads,  palaces with interior courtyards and gardens and open skylights, are specific to Morocco and essential to Islamic design because of their emphasis on privacy. The lack of street-level windows and the use of clay walls also lends to the feeling of intimacy and grace. The density of Marrakech’s riads—combined with the city’s mosques, minarets, and mosaics—makes it an exceptional place to view the Moorish architecture of the 12th through 17th centuries. Property prices in Marrakech have seen a huge spike recently after years after being tarred with the some ‘Arab Spring’ brush as nighbouring states where lawlessness, terrorism and social unrest have all but destroyed many regional property markets. Lately Marrakech has taken on an aura of glitz and glamour, and prices have never

been so steep as footballers, politicians and high profile stars of fashion, screen and even entertainment find the lure of a world that seems frozen in time. However, even the calm of Marakesh, especially in the older parts of the city where until recently wristwatches were only a passing curiosity and the minimu wage is €200 is fast disappearing. Property prices in particular are climbing stepply as more and more Europeans buy, fix up and then resell old houses – a trend that is catching on with wealthy Moroccans, too.

Miami, Florida Art Deco Architecture Perhaps the most iconic on this list, Miami Beaches historic district houses the largest collection of Art Deco architecture in the world. To transform Miami into an ultramodern and luxury tourist destination during the 1920s and 1930s, architects turned to Deco’s symmetrical and geometrical patterns, floral and animal motifs, and pastel colours to invoke fluidity and movement, which are synonymous with the city today. In Miami-Dade, home prices increased by 13.5 percent in June 2013 from June 2012 when distressed sales were included; without distressed sales, prices increased a whopping 18.2 percent in June 2013 over the same month in 2012. June values, including distressed sales, rose 1.5 percent from May to June 2013 and .08 percent when distressed sales were excluded.

69


FEATURE OC TO BER — NO VEM BER 2013

From Frank Lloyd Wright to Frank Gehry, famous architects from  the last 100 years have ensured the the shores of Lake Michigan are littered with visually areresting masterpieces. The  Chicago School  (and offshoot  Prairie School)  of architecture was one of the most influential of the 20th Century because their steel-frame constructions paved the way for the world’s first skyscrapers and therefore influenced both the skylines of cities and the way we think of urban life. Today,  structures  like  Frank Gehry’s Jay Pritzker Pavilion in Millennium Park  and  the  Renzo Piano glass-and-light filled addition to the Art Institute of Chicago make this Midwest city a living repository of architectural excellence. However beautiful and iconic the architecture of Chicago, there can be no doubt that the property market in the Windy City is in deep trouble. The number and length of foreclosures citywide continue to drag down the real estate market. However all is not gloom and doom - Chicago is continuing to improve and rehabilitate parks and neighbourhoods and Condos in high-profile residential buildings like  The Contemporaine,  designed by  architect Ralph Johnson and built in 2004  in the art gallery-filled River North neighbourhood, are highly sought after. Prices for these condos start at around USD $400,000 and the median price for a single family home in the trendy and increasiungly fashionable Near North Side neighbourhood (which includes River North) is USD $1.5 million, while in West Town (which includes trendy Wicker Park) is USD $606,000. In Near North Side, rents average around USD $2,780 a month for a twobedroom flat, while in Lincoln Park a twobed averages around USD $2,075. Condominium prices increased by 6.0% from April. The condo index is now back to May/ June 2001 levels, having fallen a total of 28.6% from their peak in September 2007. However, condominium prices were also up on a year over year basis – by a whopping 11.9%.

ture of its monuments, churches, and public buildings. Ranging from the lavish ArtDeco styled buildings to the more historic and classical structures, the architecture captures the beauty and mystery that is the Brazilian culture and displays it in physical form. Architecturally, Rio de Janeiro has several neighborhoods that offer the greatest highlights. Praca XV, or the imperial square, where the royal family of Portugal set up their temporary capital is an area with many highlights such as the Royal Palace and the skillfully carved fountain of Chafariz do Mestre Valentim, built in 1780, which was formally the sight of an old ship dock. Nearby, there is also the Centro Cultural Banco do Brasil, the largest bank in Latin America. 

Barcelona Modernisme and Gothic Architecture As seaside tourism took off in Spain from the 1960s, Barcelona was ignored. The bulk of its Modernista (Catalan Art Nouveau) buildings lay buried under decades of grime, neglected by locals and unknown to the outside world. Gaudí was vaguely known for his

House Price Change, Annual (%) 30 25

Rio De Janeiro A Little bit of Everything There is more to Rio de Janeiro than sizzling beaches and an even hotter nightlife. In fact, a large part of what gives the Marvelous City its reputation as one of the most beautiful in the world is the fabulous, archaic architec-

70

20 15 10 5 '09 SOURCE FIPE

'10

'11

'12

'13

Nominal

Real

unfinished cathedral, La Sagrada Família. But no-one knew about, or if they did gave a second throught to his inspired work on La Pedrera, his gracefully curvaceous piece of whimsy on Passeig de Gràcia. Then, beginning with the 1992 Olympic Games Barcelona underwent a renaiscence. It became a city that known as a repository of beauty, whimsy and some of the most eclectic and striking architecture the world had ever seen. Increased amounts of tourists flocked to the bust streets of Barcelona and cheap pan European and international flights brought interested visitors from the four corners of the world. Modernisme had been rediscovered and appreciated anew for the burst of joyous creativity its architects brought to construction in Barcelona from the late 1800s to the 1920s. Prior to this extraordinary movement, Barcelona’s last such building boom had come at the height of the Middle Ages, creating what survives to this day as one of the most extensive Gothic old city centres in Europe Today the housing market, like the rest of the economy, is in turmoil, resulting from a crash followed by severe austerity measures. Residential property prices are generally 35 percent lower than before 2008, according to Mr. Franks, although he added that for prime areas in Barcelona, the decline is closer to 25 percent. The trend is expected to persist over the next year or two, leveling out at 3 or 4 percent below current values. Although words such as “outrageous” and “surreal” have been recently used to decribe this situation, Barcelona it seems will not be returning to its glory days as a property powerhouse anytime soon.

© WOLFGANG STAUDT / FLICKR

Chicago


FEATURE O C T O B E R — N O V E M BER 2013

Organic Forms

J Jamie Durie is one of Australia’s most successful exports. Prolific author, multi award winning landscape designer and committed environmentalist.

with Jamie Durie

amie Durie is without doubt one of Australia’s most successful exports. Prolific author, multi award winning landscape designer and committed environmentalist, Jamie has appeared regularly on numerous TV shows, including Oprah, where he is well known for his sage advice on landscaping and other gardening issues. Jamie Durie also heads up Durie Design, a multi award winning international landscape and design form which is tremendously active across the world, with projects in Australia, Spain, United States of America, United Kingdom, Canada, Japan, Hong Kong, Singapore, Malaysia, Thailand, New Zealand and the United Arab Emirates. The firm has been responsible for some of the regions’ most recognisable landscape design projects, including the revamp of the Fullerton Bay Hotel rooftop pool garden and the VEO multi residential apartment building located in Melawati, Kuala Lumpur. Both of these executions pay homage to the organic shapes and forms of Southeast Asia and the result is a uniquely regional take on luxury, form and function.

Property Life was recently lucky enough to have the chance to chat with Jamie and he gave us some insight into his work in the region and some of the inspiration behind his groundbreaking projects in Singapore and Malaysia. INSPIRATION Jamie’s Srti Lankan heritage and true blue Australian upbringing has brought him an appreciation of the artistic sensibilities that are part and parcel of architectural and design excellence. He has also taken inspiration from the early works of Geoffrey Bawa, the well-known Sri Lankan architect whose groundbreaking projects in the late 50’s employing the theme of “Tropical Modernism” entered the design vernacular of the region and influenced much of the modern architecture of Southeast Asia. “The idea of ‘Transterior Design’ first mooted by Geoffrey Bawa the well known Sri Lankan architect is especially important to me. This concept and approach comes across clearly in much of my design work, including your furniture line, which is equally at home inside or outside.”

71


FEATURE OC TO BER — NO VEM BER 2013

THE FULLERTON BAY HOTEL The Fullerton Bay Hotel is located in the heart of Singapore’s CBD and cultural hub – with a rooftop pool garden that has sweeping views across the city and Singapore bay. Luxurious outdoor furniture, discreetly positioned to create personal poolside alcoves, bring a sense of resort style elegance to the space. This lush tropical landscape, with private spaces to relax, is one of the most perfect places to take a break from the hectic pace of Singapore’s business district. “We started on the Collyer Quay project about 6 years ago. The project actually encompasses a large piece of Singapore real estate, from the Merlion on the foreshore all the way up to the Fullerton Bay Hotel and included the redesign of the Oasis on the top of the hotel.” “The roof of the Fullerton was where we were able to have the most fun with the design. The positioning means that it has all the great Singapore benefits, extreme luxury fantastic views and a central location. All we needed to do was provide some organically inspired architecture and some beautiful plants and just add water…” “The Fullerton has become a really iconic space in Singapore and I must admit I spend a lot of time there when I’m in in the city. I love it, and not just because I had a hand in its development. When I see people swimming in the pool and enjoy-

72

FORM AND FUNCTION The Fullerton roof (lounger view above) is a synthesis of organic forms offset by the geometric skyline of Singapore. At the VEO (above left) organic shapes and functionality are combined to provide a uniquely inspired living space.

garden, sculptural lawn, play area for children and a community garden. “My background is in horticulture, I come from a green world, and if you ask someone from that background to design interiors it’s always going to be a reflection of nature. You can clearly see that in the Sime Darby VEO residential development.

A FINAL WORD ON SINGAPORE

ing the space I must admit it does give me a lot of joy.” “People are intrinsically connected to nature, and two of the strongest elements are plants and water. If you incorporate those two elements into your architecture then, in my opinion you have a winning formula.”

THE VEO The Veo multi-residential apartment building located in Melawati, Kuala Lumpur was designed with two key concepts in mind, ‘luxury’ and ‘sanctuary’. The landscape architecture speaks to the interiors with the continuity of material and colour palettes, echoing the design concept with clean design lines, textural, layered planting and ambient lighting. The swimming pool terrace is an oasis sanctuary with lush planting and private niches. The landscape also includes a terraced

In Jamie’s opinion there are some significant trends that will be guiding the architectural growth of Singapore. Amongst the most important of these are designs, which take advantage of the natural contours of the landscape and a definite move towards optimising small living spaces. In his option it is simply not enough for these spaces to be utilitarian – they need to be architecturally inspiring accommodation choices. As to the future, Jamie’s advice on designs that will be driving architectural innovation in the region: “Keep watching Iskandar, there are going to be some very interesting developments on that piece of land.” You read it here first.

Readers can catch interviewee Jamie Durie, a regular on the Oprah Winfrey show, in “THE APARTMENT – Design Your Study” which will be premiering across Asia on Starworld at the end of September 2013.


FEATURE O C T O B E R — N O V E M BER 2013

M A L AY S I A U P D AT E

Huge spike in demand for Iskandar properties

T

he interest in properties in Iskandar is being fueled by value for money, upgraded infrastructure and Malaysia’s attitude to foreign ownership of property, exemplified by the government’s support of the Malaysia My Second Home initiative. The question is; are native Malaysians losing out to foreign buyers with deep pockets? Iskandar Malaysia is being swamped by Singaporean property investors as infrastructural development continues at a frantic pace and the Malaysian authorities throw their weight behind what they believe can be a world class residential and commercial investment hub. The hope (at least from the Malaysian side) is that Iskandar will at least initially rival Singapore’s investor friendly, but increasingly pricey commercial centre. In addition both new apartment developments and semidetached units, as well as integrated lifestyle accommodation are springing up at a pace only matched by jungle vines and bamboo shoots.

The price disparity between properties with similar features and comparable floor space is creating a buying frenzy amongst Singaporeans eager to stake their claim for a bit of space that will not cost the Earth. The flood of interest from Singapore is driving up home prices across the Johor Strait by as much as RM500,000 over bank valuations. In recent months, the Johor development corridor has seen the announcement of several high-profile projects including CapitaLand and Temasek Holdings’ planned RM8.3 billion Country Garden Danga Bay development. The project by Chinese developer Country Garden is located in Iskandar Malaysia, some five minutes from the Malaysian immigration checkpoint. It features 9,000 units on the waterfront ranging from about 400 sq ft to 1,400 sq ft. There will also be a shopping mall, a man-made beach and six yacht berths. Danga Bay has firmly grabbed both headlines and the attention of both Chinese and Singaporean buyers after an elaborate campaign featuring fun-fair rides, fireworks displays and free yacht trips at

the show flat site, Country Garden Danga Bay. Buyers are being whisked through a Disneyesque experience consisting of what can only be described as a fairy tale version of an integrated development, including faux storefronts and an array of themed clubhouse rooms that see frenzied activity as slick sales staff cater to what seem to be legions of excitable Singaporean property investors on the lookout for quality property at (at least compared to Singapore) bargain basement prices. The Danga Bay condominium development in Johor Baru has sold over 5,000 of the 7,000 units on offer, with 30 per cent of them snapped up by Singaporeans. So whoever has spent the cash on this out of the world marketing experience is to be congratulated because it is certainly money well spent. A representative for Country Garden said on Sunday that 40 per cent of buyers so far are Malaysian, 25 per cent are Chinese nationals and the remaining 5 per cent were of other nationalities. The project is reportedly slated for completion by 2017. As excited as Singaporeans are about the Danga Bay development they are perhaps even more intrigued by the plans of billionaire Singaporean investment icon Peter Lim’s plans for Motorsports City and the Medini integrated development project in Iskandar. For those wondering just how they’re going to access these exciting new developments, let along make a home in Johor and commute to Singapore on a daily basis, fret not because in the pipeline is a planned intercity rail link between Iskandar and Singapore as well as a Kuala Lumpur-Singapore high-speed rail that will also stop at the Johor economic hub. “Owners in Iskandar are seeing how their property values have risen over the last few years, and many hope to cash in on it,” said property consultancy Chris International Director, Chris Koh when quoted in the The Straits Times.

73


FEATURE OC TO BER — NO VEM BER 2013

The difference between listed prices and the money that is actually changing hands (or rather the fiancé that is being sought) has also caused some sellers to abandon any ideas of valuation and instead to rely on a gut feel for pricing, combined with a keen interest in the economics of supply and demand. “Home owners are left to resorting to street talk to gauge the price of their home, based on what they hear a nearby home has been sold for,” Koh said in the report. Another real estate agent, Germaine Ng, said the move by homeowners to place a hefty premium on their properties adds another obstacle to potential buyers. Banks will not finance a property purchase for more than its appraised price, so buyers must pay for the difference in cash. Which suits many sellers down to the ground. The old saying that cash is king is proving even more true in times of economic hardship when this sort of transaction is music to the ears to those who might not value transparency quit as much as either the Singaporean or Malaysian governments may like. Koh and Ng agree that Singapore buyers began having second thoughts once property owners in Iskandar started asking for RM200,000 over bank estimates but, ultimately, have decided that the differential between Iskandar prices and the prices in Singapore are simply too great to ignore. Even when faced with the prospect of parting with bundles of cold hard cash that would not look out of place as ransom payments in a Quentin Tarantino movie.

74

In one example, Ng said a Singapore prospect pulled the plug on the purchase of a RM2.65 million mansion in Perling as it was RM250,000 above the assessed price; four months later, the home sold for RM3 million. For locals, however, the phenomenon may be a sign of very bad news indeed. An influx of foreign buyers will further squeeze out Malaysians already reeling from rapidly increasing home prices across the the country, including both Johor and the Capital city of Kulala Lumpur. In 2008, a two-storey link house in Taman Bukit Indah sold for RM400,000. Today, the same home is just a hair under RM1 million. To make matters even more attractive to foreign investors Malaysia’s MM2H (Malaysia My Second Home) programme is attracting foreign property investors to the country in increasing numbers. The progamme is promoted by the Government of Malaysia and allows foreigners who fulfil certain criteria, to stay in Malaysia for extended period of time on a 10-

COUNTRY GARDEN’S S$7 BILLION DANGA BAY PROJECT

Country Garden, one of China’s largest property developers, has chosen Malaysia as the first stop in its global expansion plan, with a mixed-use waterfront estate currently under construction in Iskandar, which is popular with Singaporeans. SOURCE COUNTRY GARDEN

year Multiple-Entry Social Visit Pass which is renewable for as long as they comply with the existing rules and regulations of the MM2H programme and laws of the country. The MM2H programme is open to citizens of all countries recognised by Malaysia regardless of race, religion, gender or age (although the applicant must be above 21 years old). Applicants are allowed to bring their spouses and unmarried children below the age of 21 as dependants. The popularity of the programme is such that the influx of retirees, who make up a substantial portion of those taking advantage of the programme is contributing to driving up property prices in regions that include Iskandar. Although there has been no formal research into property investment in the area by those taking advantage of the MM2H programe, there is anecdotal evidence to suggest that the ability to invest in property relatively easily (at least compared to some countries in the Southeast Asian region) is one of the reasons that the MM2H programme is proving so popular. The MM2H programme is attracting interest from foreigners interested in making Malaysia their base for exploration of the Southeast Asian region. Low cost of living, lifestyle compatibility and an expat friendly attitude towards property investment certainly influences the decision of foreigners to make Malaysia their home. Iskandar Malaysia, previously dubbed the Iskandar Regional Development, was launched in 2006 by then Prime Minister Tun Abdullah Ahmad Badawi as a way to drive progress in the southern region and tap into expansion demand from companies operating in expensive industrial and commercial hubs of neighbouring Singapore. Although Singapore was initially skeptical of developments in Iskandar, seeing a potential rival for precious foreign investment in the making, the advantages to an integrated investment corridor have started to make sense. Khazanah Nasional, the main shareholders of Iskandar, is also in a joint venture with Singapore counterpart Temasek Holdings to develop a “Wellness Township” in Medini, Iskandar. This development has so far attracted over RM6 billion from Singapore firms, with Iskandar Regional Development Authority (IRDA) estimating that RM5 billion came from the republic’s SMEs.


Never miss an issue.

Have a copy of the magazine delivered directly to your home, office or iPad. Read up to one week before it is available in the shops.

Subscribe now for free Three ways to subscribe 1 Complete the form,

scan (or photograph) and email to info@panashcomedia.com

2 Or post it to:

1 Scotts Road #20-01 Shaw Centre Singapore 228208

3 Subscribe to the iPad app through

the App Store or on our website at www.propertylife.asia/subscription.html

ADDRESS:

1 Scotts Road, #20-01 Shaw Centre, Singapore 228208 • TELEFAX: +65 6534 9390 • EMAIL: circulation@panashcomedia.com


FEATURE OC TO BER — NO VEM BER 2013

The Little Red Dot vs The Happy Country

Residential Tenancy Law Shootout Australia and Singapore

N

ew research suggests that buyers from Southeast Asia and the wider Asian region are tremendously interested in Australian property investment opportunities. In this article Property Life contributor, Leonora Roccisano, of William Roberts Lawyers will be examining the differences between tenancy laws in Singapore and Australia. This knowledge can make the difference between a property investment that delivers superior returns and one that will not only underperform, but that will also consume unnecessary amounts of time and effort.

To paraphrase a Chinese saying; “Property gets sick, but it never dies’ – by neglecting to research or understand the regulations governing the rental of properties down under the property owner will ensure that their property investment will get very ill indeed. Whether or not that investment proceeds to become terminal will depend to a large extent on the (sometimes very expensive) remedial action that will be required. Sometimes a penny’s worth of prevention is far more effective than a Pounds’ worth of remedial action. In light of this advice those considering a property investment in Australia with an eye on rental income would find the following of interest. The residential tenancy laws in Singapore and Australia differ, and so it is important that owners or prospective owners of Australian residential property, understand their rights and obligations as a landlord. By doing so, you will ensure that the returns on your property investment will continue to justify the decision to invest in the country.

76

In some states and territories of Australia, there are prescribed forms for tenancy agreements that: A stipulate the standard terms and conditions as to how a residential tenancy arrangement is to operate B include the period of the tenancy arrangement, rent payable and rent review Failure to follow the requirements of the residential tenancy legislations will not necessarily result in the tenancy agreement being unenforceable, but it will become difficult to deal with disputes and it may also attract penalties. Also, whilst you can negotiate further terms, those terms need to comply all relevant laws. Overall, the best way to ensure that both you and your tenant understand your respective rights and obligations is to have a written tenancy agreement that is clear as to the terms of the tenancy arrangement. Further, this will also limit disputes between you and your tenant.

THE PARTIES’ OBLIGATIONS GENERALLY Your obligations In Australia, landlords are obliged to, amongst other things: A give their tenant quiet enjoyment and use of the property, meaning they must not interfere with or unreasonably disturb the tenant possession of the property B maintain the property in a reasonable state of repair at their cost C pay the rates, taxes or charges such as council rates , electricity bills and water bills

Tenants obligations Tenants’ obligations include: A paying the rent as stipulated under the tenancy agreement B allowing the landlord or the landlord’s property manager access to inspect the property, within reasonable terms C keeping the property in good order and repair D making no alterations to the property without consent from the landlord E not using the property for any illegal purpose or in a way that disturbs any neighbours Key Facts about

Australian Residential Tenancy Types of Tenancy The term of tenancy can either be a fixed tenancy term or a periodic tenancy term. A fixed term is fixed for a period of time such as weeks, months or years, whereas a periodic term continues on an indefinite basis. Relevant Legislation There are residential tenancies Acts for each of the states and territories in Australia. E.g. in NSW, it is the Residential Tenancies Act 2010. Where to go to deal with disputes Some states and territories in Australia have dedicated tribunals or commissions to deal with residential tenancy disputes. E.g. in VIC, there is the Victorian Civil and Administrative Tribunal.

WHAT TYPE OF TENANCY ARE YOU INTENDING? One of the most important things to consider when you intend to become a landlord or each time you negotiate a new tenancy agreement, is whether your property can be used in the way you intend to tenant it out. Each property has its own local environmental planning legislation as well as other local government legislation that states how a property can be used and occupied.


FEATURE O C T O B E R — N O V E M BER 2013

RENTAL RETURNS IN SYNDEY ARE ACCEPTABLE SYDNEY APARTMENTS

LAST UPDATED: OCTOBER 1, 2012

COST (US$)

PRICE/SQ.M. (US$) YIELD

TO BUY

MONTHLY RENT

TO BUY

MONTHLY RENT

60 sq. m.

486,720

2,537

6.26%

8,112

42.29

100 sq. m.

871,700

3,592

4.94%

8,717

35.92

150 sq. m.

1,894,500

6,203

3.93%

12,630

41.35

Districts researched: Sydney: CBD, Paddington, Darling Point, Double Bay, Kirribilli, Rose Bay, Tamarama, Bellevue Hill, Point Piper Potts Point, and Vaucluse SOURCE GLOBAL PROPERTY GUIDE | WWW.GLOBALPROPERTYGUIDE.COM

IN DEPTH LOOK AT ONE OF YOUR OBLIGATIONS AND HOW TO ENSURE YOU MEET IT Obligation to repair In Australia, unlike what is often the case in Singapore, landlords are largely obliged to pay for all maintenance. Each state and territory has its own requirements as to landlords’ obligations to repair and maintain. For example, in New South Wales, landlords must provide the premises in a liveable condition, whilst providing and maintaining the premises in a reasonable state of repair, but they only need to the extent warranted in the circumstances, taking into account the age of the property and the amount of rent being paid by the tenant. Whereas in Victoria, legislation provides that the property must be maintained in good repair by the landlord, but a landlord would not be in breach if the damage was caused by the tenant and the landlord gave the tenant notice to repair that damage.

Obligations for urgent repairs In New South Wales, on prior notice to the landlord of the need for repairs, a tenant is able to authorise urgent repairs. The tenant then has a right to be reimbursed (to a maximum amount) for those urgent repairs by the landlord if they request reimbursement within 14 days of completion of the repairs.

TERMINATION Generally in Australia, both landlords and tenants may terminate tenancy agreements, but the method of doing so depends on what type of tenancy has been entered into between the parties.

For example, in Victoria, where the tenancy agreement is a periodic tenancy arrangement and the tenant wants to terminate the tenancy agreement, the tenant must give the landlord at least 28 days’ written notice of their intention to vacate the property. In circumstances where it is a fixed term tenancy arrangement, either party can terminate the tenancy agreement by serving a written notice to the other party, but the period of notice depends on the terms of the fixed term. That is, if the tenancy is for six months or more, the notice period is ninety days’ notice, and where the tenancy is for less than six months, the notice period is not less than sixty days.

Grounds for termination Termination for non-payment of rent Non-payment of rent is probably the most common reason that landlords attempt to terminate tenancy agreements. To serve a notice of termination, it is important to remember that you must give the required written notice of termination as prescribed by the relevant legislation. In particular, you must ensure that the written notice of termination specifies the tenant and landlord’s names, address of the property, reason for the notice and termination date or any other requirements under the tenancy agreement. On what other grounds can a landlord terminate a tenancy agreement? A landlord can terminate a tenancy agreement when its tenant breaches what is called an “essential term” of the tenancy agreement. Examples of essential terms are terms that detail the rental amount,

the rental collection terms, the commencement and end of the lease, the occupants of the premises, and alterations to the premises.

STAY ON TOP OF YOUR INVESTMENT You should be sure that your property manager keeps you informed of all communications it has with your tenant and matters that arise that are outside of the usual day to day management of the property. You want to be particularly sure you that you know about any negotiations your property manager has with your tenant relating to the terms of the tenancy agreement. It’s a good idea to negotiate with your property manager at the outset exactly what you expect to be updated about and when.

CONCLUSION So, our conclusion is that as with most investment some due diligence will dramatically increase the chances of superior returns. In the case of a property which may be under the control of a property management company much of the time it is even more important to ensure that all the regulatory i’s are dotted and the legal t’s are crossed. It’s not hard to invest in Australian residential property, even if you are investing across borders, as long as know your rights and obligations. As usual our advice is simple – always consult with a legal expert with specific knowledge of the legal system concerned prior to engaging in any actions that involve a pen and a dotted line.

77


FEATURE OC TO BER - NO VEM BER 20 13

T O P 3

Surprisingly hot property destinations

Globalisation has added fuel to the property fire and there’s a rush to invest in often-neglected regions. These regions, which usually escape the attention of even savvy investors, are today being recognised as exhibiting the nascent signs of superior return on investment. In this month’s edition PropertyLife takes a look at some of the rough diamonds in the global property investment vault. BY NAMTA GUPTA

78

hot’ nor even capable of passing under the radar of property investors across the globe. However, some emerging economies have upped their game and are offering great options in property investment. These are the countries that have bet the farm (and many urban areas) on the fact that infrastructure development, telecommunications, safety and security and other focus areas are going to pay huge dividends for their global competitiveness and the attractiveness of their property markets.

INDIA So far, India had seen investment coming only from Indians or Non Resident Indians (NRIs), but all this may change soon if analysis by leading property consultant, Cushman Wakefield is to be believed. According to Cushman Wakefield, India attracted investment of around USD $3.4 billion in the year 2012 and ranked 20th on the worldwide list of top real estate investment destinations. The analysis by this firm reinforces the belief that India will soon emerge as a major player in the investment segment of the global real estate market. What has also helped the Indian real estate market to capture both the imagination of investors and a position on this prestigious list is the number of options it presents to a potential buyer – several Indian cities have major real estate projects lined up for investment purposes. Though these projects have been tailored toward to satisfying a growing domestic demand, low prices

THERE IS ALWAYS SOMETHING NEW OUT OF AFRICA So said Aristotle around 2300 years ago in a book on natural history.

Although Africa may still have its share of problems, property prices in places like Kenya are on the rise.

and rapidly improving urban infrastructure makes India a great international investment destination. Mumbai and Delhi are the clear favorites amongst a growing group of sub continent focused investors, but the growth of Bengaluru, the software hub of India means that both Mumbai and Delhi are now vying for investor attention. What makes this trend even more unique is the fact that, until now, India was nowhere on the property investment radars but now it is the latest hotspot that has the potential to provide investors with favorable returns. It should however be no surprise that investors have shown an increasing amount of reluctance when it comes to those properties aimed squarely at the expat rental market. Increasingly public questions are being asked regarding safety and security across India, especially when it comes to women. For many expats with families even the most generous

© FROM TOP: MEGAN FITZGETRALD, MAX GRABERT / FLICKR; OPPOSITE PAGE: RHODES8043 / PIXABAY

T

he trend toward a more global focus on property has started dominating investment scenarios to the point where current international property favorites, like Hong Kong, Singapore, London and Dubai are facing stiff competition from some surprising new entrants that have captured the fancy of real estate enthusiasts through a combination of real value and a growing sense of excitement that a global property renaissance is about to give the market a much needed shot in the arm. Of course, this does not mean that the established players will fade away from the popular imagination (and long term planning). This is very unlikely actually, considering that they remain safe bets (well, safer than many alternatives) and have ,well-formulated and time proven regulatory frameworks in place to safeguard the interests of investors. But for many investors the maturity and slowdown in the activity within these safe havens is a sign that the price levels have reached a plateau, which means that there is very little that these markets can offer budget investors or those in search of investments that outperform traditional financial instruments. For this reason risk tolerant investors at all levels are on the lookout for new investment destinations. In Southeast Asia heavy property investment hitters such as Malaysia and Thailand have started actively and aggressively enticing investors with programs such as Malaysia’s ‘My Second Home ‘ initiative and so should no longer be considered ‘surprisingly


FEATURE O C T O B E R - N O V E M B ER 2013

of packages are viewed with an increasingly jaundiced eye. If India is going to maintain its ranking as a property investment destination of choice then the safety concerns of large multinationals will have to be addressed.

INDONESIA It may surprise several people who view Indonesia as just a travel destination (thanks to beaches of Bali and the great natural beauty which characterises the Indonesian Archipelago and mainland), but this South-East Asian nation has been flexing its muscles with élan in the real estate market for quite some time now. Though decades of political and economic turmoil have historically been a major cause for concern in the past for many international investors, these concerns have recently been addressed, in part due to a changing political and security environment. Although there are still questions around these issues many investors are considerably more upbeat about the investment potential of Indonesia.. A report, ‘Emerging Trends in Real Estate -- Asia Pacific 2013’, issued by PriceWaterhouseCoopers and the Urban Land Institute, put the Indonesian capital of, Jakarta ahead of real estate markets of Asian giants like Hong Kong and Singapore. Property in Jakarta can be purchased at rock bottom prices, at least compared to the two investment destinations previously mentioned (however that comparison is not particularly helpful as the markets concerned have very real structural differences). Jakarta also offers the possibility of excellent returns on investment. But there are some red flags that a potential investor must consider, like a lack of credible information about developers and the unavail-

ability of low-interest bank loans. If these issues can be addressed in near future, then this country has the potential to overshadow even Mainland China as a possible investment hotspot.

KENYA According to Knight Frank and Citi Private Wealth’s report, Kenya is set to provide investors with opportunities as bountiful as the wildlife in its famous Maasai Mara National Park.. In fact, it’s top of the sunbaked termite mound when it comes real estate investments in emerging economies. Kenya’s meteoric rise is phenomenal in the sense that this country, like Indonesia, had been mired in social and political unrest for decades. But again, just like Indonesia, Kenya has emerged from an extended period of social upheaval with flying colors. Generally regarded as the beating heart of East Africa, Kenya is a great destination, with a combination of natural beauty and friendly locals that is as charming as it is disarming. Tourists descend from all corners of the globe for leisure and business purposes, taking advantage of an increasingly developed infrastructure and exceptional value for money. Yet the potential of Kenya as a real estate destination remains largely untapped by foreign investors, meaning that the prime beneficiaries of the property boom are the Kenyans themselves. Although this is great news for Kenya in general there remains massive opportunity for aggressive and selfsustaining economic growth if both commercial and residential property could receive a boost through foreign investment. Due to a lack of information, potential foreign investors have abstained from buying. Perhaps Kenya has not caught the fancy of investors due to issues like a lack of proper security measures and civic amenities. How-

ever, it is perhaps the potential of this market to succeed that is finally starting to lure investors. There is no other market where the price to enter the market is so low when compared to the expected returns. As a result, developers – with no shortage of funding – are flocking in to build office space, shopping malls and residential accommodation, further driving promise, hope and expectation in this East African nation. A recent Knight Frank and Citi Private Wealth study found that Nairobi was the best performing prime residential market in the world with citywide value growing by 25% in 2011, leaving luxury hotspots such as London, Miami and Hong Kong behind, a trend that has continued through 2012 and into 2013. Ben Woodhams, Managing Director of Knight Frank Kenya, says the findings of the survey took even the agency’s much vaunted research department by surprise. “We were higher than Miami and it was like ‘how dare you,’” he remarked. “So we had to justify our figures and say ‘yes, this really is what is happening here.’ But it is about growth, it is not about value.” Although this growth comes from a base of relatively low prices, Woodhams says there are a number of factors that have made investing in Kenya’s luxury housing market relatively attractive when compared to other global markets and especially when compared to elsewhere in Africa. “Regionally Kenya is a safe haven,” he says. “People are seeing relatively good returns in Kenya specifically, but [also] in Africa as a whole -- particularly with the problems we are seeing in the rest of the world.” The lure of high Kenyan investment returns should be treated with some caution. Although the capital city of Nairobi is home to large multinational companies and a rapidly developing infrastructure, it has to some extent fallen victim to its own success. This is a vibrant city that is filled with possibility but also subject to the failings caused by explosive growth, which include inadequate garbage collection, safety and security issues and a public transportation system that could charitably be called dysfunctional. However, in many of the suburban locations that are experiencing growth in the luxury segment of the development market the only disruptions to the lives of the privileged residents may be the chance of a thorough soaking by an errant water sprinkler. And if that’s the worse of your worries, then as the local expats say, “well, just another perfect day in Africa.”

79


FEATURE OC TO BER — NO VEM BER 2013

Wild about the Wet

Premium pricing characterises beachfront property

P

huket property buyers are paying an 89 percent premium for their beachfront properties compared to similar land-locked homes – and that’s among the highest anywhere in the world. Knight Frank surveyed real estate agents in 10 popular second-home destinations around the world and discovered that prime waterfront properties in coastal locations around the world are worth an average of 63 percent more than their inland counterparts. However, there are regional differences from city to city, they noted. Waterfront properties on Italy’s Lake Como and in Barbados have the highest price premium. In both locations coastal homes can command prices of more than 100 percent higher than equivalent homes inland. They were followed by homes in Phuket and the central Algarve along Portugal’s southern coast where values increase by 89 percent and 75 percent, respectively. At the other end of the scale prime waterfront properties in coastal locations in Dubai are only worth an average of 10 percent more than inland homes. In The Hamptons, home to some of the most expensive residential properties in the United States, the presence of water only increases the value of a property by an average of 30 percent.

Global means sea-level above 1992 level, metres Forecast

2.0 1.5 2.0 0.5 1992

2020 Highest

40

60

Intermediate High

80

Intermediate Low

2100

0

Lowest Scenario

SOURCE NOAA CLIMATE PROGRAMME OFFICE; JEROEN AERTS AND WOUTER BOTZEN, INSTITUTE FOR ENVIRONMENTAL STUDIES, VU UNIVERSITY

PHILIPPINES - MANILA FLOODING AUGUST 2013 Asia is one of the world’s most vulnerable regions to the impact of climate change. Many countries, including the Philippines, Bangladesh, China, Thailand, and Vietnam are already experiencing frequent and severe problems caused by the increased intensity and severity of cyclones, flooding, drought, and rising sea levels. PHOTOS BY RHOY COBILLA

Coastal Average Premiums Lake Combo

100%

Barbados

100%

Phuker

89%

Central Algrave

75%

Miami

60%

Cannes

40-60%

Cape Town

56%

Mallorca

50%

The Hamptons

30%

Dubai

10%

In the U.S., waterfront properties sell for 60% more than non-waterfront homes in Miami, according to Knight Frank. According to Audrey Ross, senior vice president of Esslinger Wooten Maxwell, an affiliate of Christie’s International Real Estate, sometimes waterfront properties can sell for more than a 100% premium, — double the price of a non-waterfront equivalent.

80

“The premium goes directly to how high the water is and how wide the views are. Basically, the bigger the view, the higher the price,” she says.

Water water everywhere Although there doesn’t seem to be any slowdown in sight for the steadily increasing costs of waterside homes those taking the long view might be prudent to take a closer look at the high water mark when purchasing beachfront property. Even reviewing historical high water levels might be of little use if the dire predictions of many climate change pundits are correct. Whether or not sea levels are rising as a result of anthropogenic (man-made) causes or as a result of Earth’s natural warming and cooling cycles is a moot point when the seawater starts seeping under the front door. The fact of the matter is that sea levels are rising. At the high end of the residential property

market many investors are purchasing properties as multi generational investments. The threat of rising sea levels has not impacted interest in this market significantly, however as scientific consensus continues to build this is a debate worth noting. For around 2,000 years sea levels remained relatively constant. Between 1880 and 2011, however, they rose by an average of 0.07 inches (1.8mm) a year, and between 1993 and 2011 the average was between 0.11 and 0.13 inches a year. In 2007 the Intergovernmental Panel on Climate Change (IPCC) forecast that seas could rise by as much as 23 inches by 2100, though since then many scientists have called that forecast conservative. Seas are also expected to warm up, which may make hurricanes and tropical storms more intense. These are worrying signs for those who are contemplating investment at the edge of the ocean.

Panashco Media is the media partner of PropertyGuru in Southeast Asia. Portions of this article appear courtesy of PropertyGuru.


FEATURE O C T O B E R — N O V E M BER 2013

Want to attract interest in your holiday rental? Add the soothing sounds of a high-end home entertainment system.

Sound Investment

© JIKATU / FLICKR

E

ver wondered why middle of the road, budget hotels have music channels on offer through the television sets? Maybe it’s because cutting edge sound delivery is extremely important to the men (and women) behind the scenes and they've put a lot of thought and care into the selection of music they make available to their guestss.Perhaps they’re extremely proud of capabilities of their television sets. Personally we at Property Life doubt it, that’s why we are eternally thankful that Smartphones and portable speakers are developing at such a breakneck pace. If you really want to get jaded guests interested in your rental property you’re going to have to go that extra mile, and one of the ways to make sure that your visitors can kick back and really enjoy their downtime is to invest in an entertainment system that is going to keep them coming back for more. One manufacturer that has been winning accolades and loyal customers for decades by providing a range of integrated entertainment solutions suitable for every use, from conveying the mellow sounds of Bob Marley while the sun sets over a tropical beach to providing guests with the option of taking in the latest and greatest movies, is Bang & Olufsen. B&O have been hard at work creating some entertainment system options that will

The Beolab 14 which is designed for use with the Bang & Olufsen TV retails in Singapore for $5,500. The system designed for non B&O TV’s retails for $6,000. "Providing simple integration for people who do not own one of our televisions but still want to enjoy a true Bang & Olufsen sound experience has been a particular focus for our development team," B&O CEO Tue Mantoni.

make your rental property stand out from the crowd, satisfying even the most demanding audiophile and leaving the choosy home theatre aficionado longing for their next experience at your holiday rental. The Beolab 14 is a new approach to surround sound from Bang & Olufsen, featuring compact design and most importantly for a rental property - flexible placement options. This makes the system ideal for the indoor / outdoor lifestyle that is part and parcel of the holiday experience. Placed near to a patio or outdoor area the Beolab 14 will make managing home entertainment as cool and relaxing as a seaborne breeze. The Beolab 14 is currently available in two packages. The first is designed for use with Bang & Olufsen TV’s and consists of

DANISH STYLE The Beolab 14

four satellite speakers and one subwoofer. The second option is available for those consumers who do not have B&O TV’s and consists of a five speaker system, plus a single subwoofer. Bang & Olufsen has upped the visual stakes as well with the (very) recent announcement of their latest generation of the best selling BeoVision 12 NG (New Generation), powered by their BeoSystem picture engine. This cutting edge plasma TV now boasts smart features that make the viewing experience even more immersive. Described by B&O as the “ultimate picture and sound experience” it features an integrated 7.1 surround module which powers the centre speakers and the satellite speakers which can be attached to the TV. The BeoVision NG features five PowerLink connections enabling the user to connect up to 10 BeoLab speakers and a subwoofer. The BeoVision 12 New Generation can be mounted flush with the wall, or it can be placed on a motorised stand which allows the viewer to easily control its position and viewing angle. B&O Singapore recommended marrying the BeoVision with either BeoLab 5 or Beolab 12 speaker systems. Whatever choice you make you’re assured that your holiday rental property is simply going to ooze Danish style.

81


FEATURE OC TO BER — NO VEM BER 2013

Property Tips for Foodies

The gut feel guide to Property Investment –

The world’s most popular Food Festivals

T

here are many factors which come into play when deciding where to buy or rent a property. The decision making process involves a delicate and in some cases stressful balancing act between investment and return. In some rare cases cold, hard calculation must be supplemented by something more visceral. Purchasing property can be an affair of the heart, rather than a logical decision. The colours of a sunset over a darkening sea, the smell of freshly mown grass, the sound of running water – all can make the difference 82

between a simple calculation of a potential return on investment and a leap of faith into an investment in a quality of life. No formula can give us the answer to what makes us fall in love with a property, but here at PropertyLife we believe strongly that you can have your cake and eat it, you can enjoy superior returns on investment in terms of your chosen property, while still enjoying life to the full. Which is why this article is all about gut feel, literally. We’re going to explore how your stomach (and great tasting food) can make a huge difference to both your quality of life and your property investment decisions.

Without further ado, here are nine global gustatory ‘to-die-for’ events that will influence where foodies and wine lovers may choose to invest . E.E Cummings has once said that the most wasted of all days is one without laughter. But the Irish have a much better way of putting it: laughter is brightest where food is best. And because Property Life believes that great food is the key to a fruitful—and yes, brighter day, we have chosen to cherry-pick some of the best food festivals around the world that will provide a plate full of yearlong fun.

© FLYDIME / WIKIMEDIA COMMONS

BY JONALYN FORTUNO


FEATURE O C T O B E R — N O V E M BER 2013

Melbourne Food and Wine Festival MELBOURNE, AUSTRALIA (MARCH)

South Beach Wine and Food Festival

© FROM TOP LEFT: THE COSMOPOLITAN OF LAS VEGAS, TRUPP PHOTOGRAPHY / FLICKR; MIKE SHADLE / WIKIMEDIA COMMONS

SOUTH BEACH, FLORIDA, UNITED STATES (FEBRUARY) For those who are of a culinary bent, the festive season is given a welcome extension in the first quarter of each month, albeit with a conspicuous lack of falling snow. February sees Santa make an appearance appear in the form of celebrity chefs and renowned regional winemakers who gather together for one reason: to delight everyone’s taste buds and satisfy appetites for both food and drink. Those attending the Florida festival will also be on the lookout to restock wine cellars and pantries which have been depleted by proper festive season indulgence. Over the course of four days, the South Beach Wine and Food Festival guarantees to give you one of the best wine and gourmet experience while having the time of your life in party central of Miami. And with all things gourmet and bacchanal that take place every February makes South Beach a complete package, which no one would have the heart to miss. Indeed, those organising the South Beach Wine and Food Festival know just how to take the food, drink, and party to a whole new level.

But it’s not just those on South Beach that know how to eat, drink, and party big. When it comes to festivals the Australians are prepared to go head to head with the best in the world and they’ll often be the ones on top of the pile when it comes time for the revelers to finally call it a day. In March the city of Melbourne comes to the party with its fair share of food and booze whenever the month of March strikes. So after hitting South Beach, food and wine lovers might as well catch the red eye to Melbourne for another food and wine extravaganza. And it’s worth the jetlag, especially when you get to smell and taste the epicurean treats of the best chefs in town, in what many believe is the best place in the world for fusion style (notwithstanding the well earned reputation of both Singapore and Kula Lumpur) cooking. Straddling the tastes of both Asia and the West, with access to some of the freshest quality ingredients in the world, Australia is a foodies Mecca. Melbourne in particular is rapidly gaining ground on the more established foodie destination of Sydney as THE place to experience some culinary wonders. And because the Melbourne Food and Wine Festival has earned its rightful place as one of world’s best, the biggest culinary and wine personalities from around the globe block off their calendar to join in the fest and tease and tantalise the taste buds of visitors from all over the world with their signature gourmet creations and wide-array of wine collections. Anyone who wants to take part in this event should bring an extra plate and yes, bigger-size pants. Because for two weeks, you’re in for a waist expanding experience.

Taste of Chicago GRANT PARK, CHICAGO (JULY) A simple name for what seems to be building a reputation as a foodie event featuring some of the most refreshingly complex tastes in the world. Held in the “Windy City” in the middle of July every year. Taste of Chicago claims to be the largest food festival in the world. This is a festival that never fails to delight everyone’s taste bud, with over 300 local flavors plated and served to an adoring and one assumes slightly breathless public – this is a really big festival and you’re going to have to get a move on if you’re going to be sampling a little of everything. Being the largest in the food fest lot, it’s hardly surprising that at least 3 million people from around the world pack their bags every summer and head to Chicago just to take part in this gastronomical extravaganza. Though sampling of the main food courses is the highlight, there are other activities that keep all five senses occupied, such as cooking demos, live music, stage performances, arts and crafts, and many other suitable distractions for even the most easily bored of festival goer.

83


FEATURE OC TO BER — NO VEM BER 2013

VERMONT, UNITED STATES (JULY) Blessed are the cheesemakers. Imagine if you will a life without cheese. No nachos, cheese dogs, cheesecakes, pizzas and cheeseburgers or parmesan for your spaghetti. Even the humble toasted cheese sandwich would be a thing of the past. The horror, the horror! Then imagine yourself in a place with 100 cheeses to choose from, and suddenly all is right with the world once more. Celebrated every month of July, the Vermont Cheesemakers Festival guarantees you a whole day of dairy goodness. More than 40 local creameries are present, bringing in their best cheese products to the party. What more could a cheese buff ask for, aside from perhaps a larger pair of pants and a cool shady spot to gather the energy for the next foray into the wonderful world of curd an culture. The best part, though, is the sampling of all 100 cheeses, which are paired with smoked meats, breads and cider (great with a sharpish cheese). Once you have your fill, you can enjoy other activities such as the cooking show and cheese-making demo.

84

Maine Lobster Festival ROCKLAND, MAINE, UNITED STATES (AUGUST) For 66 years, Maine has lived up to its own billing as the lobster capital of the United States, claiming to host the best seafood fest in the world. Anyone who loves crustaceans, and lobsters in particular, will surely feel joy in their hearts at the sight of thousands of lobsters being boiled in the world’s largest steamer. Celebrated every August, the Maine Lobster Festival is something that both locals and international visitors look forward to every year. During the show Maine puts its best foot forward with the freshest, juiciest lobster rolls, oozing butter and flavor in sufficient quantities to cause those with seafood allergies to deeply regret the hand that genetics has unfairly dealt them. If eating becomes a little too much for you (heaven forbid), you can take a breather and watch the art show, lobster-eating and codfish-carrying contests, Lobster Crate Race, sea goddess coronation, parades and other activities, all of which form part of the annual festival experience in Maine.

Garlic Festival ISLE OF WIGHT, ENGLAND (AUGUST) Good thing it’s not set in Transylvania. Or else the good Count would have had a seriously annoying time of it during August of every year, as the ubiquitous smell of garlic wafts across the green and pleasant Isle of Wight. There really is not escape for those who call the small island home. It’s a stark choice - embrace the bulb or suffer a full month of taping up the windows and barricading the doors. If you think that garlic can only be used as a condiment, or flavouring for savoury treats you’re in for a big surprise. The Garlic Festival will show you that the humble Allium Sativum is equally at home as a flavor for ice cream, fudge and even beer. So if you’re feeling a little bit adventurous, have a few scoops and try a few rounds. Just don’t forget to chew some mints afterwards. For non-adventurous, there are other activities that don’t require industrial sized helpings of mouthwash, including live music and arts and crafts.

© CLOCKWISE FROM TOP: 2013 VERMONT CHEESEMAKERS’ FESTIVAL; MAVERIC2003, MANRAY 3 / FLICKR

Vermont Cheesemakers Festival


FEATURE O C T O B E R — N O V E M BER 2013

Truffle Festival ALBA, ITALY (OCTOBER)

La Tomatina BUNOL, VALENCIA, SPAIN (AUGUST) And here we all were thinking that hurling tomatoes was last seen as sub standard Shakespearian performances in Edwardian London. Thankfully this is simply not the case. Spain’s La Tomatina festival is proof that when it comes to ingredients (even if they’re not destined for the pot) more is certainly better. 40 Metric Tons (around 150,000) of tomatoes, specially grow for their soft, squishy nature joyously exchanged by festival goers wearing masks (and in some cases snorkels) and gloves to best experience the joy of regressing to childhood if only for a few hours. Count us in.

© FROM RIGHT: OCTOPUSHAT, CARRIEZIMMER / FLICKR

Although this festival has other activities such as music, parades, fireworks and street parties people are without doubt more interested in getting down and dirty. But before getting all red, someone has to climb atop the greasy pole to snatch the festival ham. Once this has been accomplished, truckloads of tomatoes will be unloaded and that’s when the fun begins. May the sauce be with you. La Tomatina is without a doubt the biggest and most fun tomato fight on earth (competition is thin), so better mark your August calendar with a giant red tick and plan those vacation days.

Kentucky Bourbon Festival BARDSTOWN, KENTUCKY, UNITED STATES (SEPTEMBER) The limelight may not be on food but still one of the most-anticipated festivals particularly for Bourbon nuts. Leave it to Kentucky to throw the best Bourbon festival, which no Maker’s Mark (or Wild Turkey, or Jim Beam) fan is going to dare miss. It is said that chicken and Bourbon battle it out for top spot as Kentucky’s most famous exports (Bourbon is actually distilled in a number of other states), with Kentucky recognised by many aficionados as one of the world’s best brewers of strong liquor. Thus, it come as no surprise that one of its cities, Bardstown, is touted as the ‘Bourbon Capital of the World’. Which goes some way to explaining why the Kentucky Bourbon Festival is held here every September. Although Bourbon is, of course, the main draw, there are also other activities, which cater to non-drinkers. Food and entertainment feature prominently in the lineup. Horseshoe pitching, barrel racing, locomotive rides and the like keep those not in search of a Bourbon tinged food or drink experience entertained.

If there is one place in the world that foodies consider a gourmet haven, it’s Italy. So when this country throws a food festival, foodies from all over the world over arrive, plate in hand. When you mention the word ‘truffle ‘ you can be sure that those plates might just be accompanies by the best silver cutlery - all the better to enjoy a culinary treat known to many as ‘white diamonds.’ Celebrated every October, the Truffle Festival provides a rare opportunity to feast on one of Italy’s most delicious and elusive culinary treasures – the white truffle. This event is a sought after showcase of world class skills and even celebrity chefs have to go through the nail biting process of participation in an invitation-only truffle auction just to see if they will be bale to secure the fresh ingredients required as the pre-requisite for an invitation to this prestigious festival. For foodies the process is a lot simpler they can attend anytime and limit their stress to coping with the journey to Alba as it’s not really a convenient location, unlike other gastronomic hotspots in Italy. Nevertheless, it’s worth every maddening step in a country known for histrionics and a very ‘flexible’ approach to public transportation. You can also wander in various stalls and get a taste of local delicacies. Besides the spectacularly good truffle, there are also other treats such as cheese, salami, and honey that are available for you to take back home for some culinary reminiscing over a gastronomic highpoint of any foodies life.

85


FEATURE OC TO BER — NO VEM BER 2013

Renewable Energy 101 Homes are one of the largest consumers of electric power used to provide light, heat or warmth to residents as well as run modern-day appliances and equipment needed to make life easier and more comfortable. Is there a global argument for the adoption of renewable energy sources on private properties? BY Kalsoom Usman and Jonalyn Fortuno

86

FORECAST OF WORLD ENERGY CONSUMPTION

600 500 EXAJOULES PER YEAR

FOSSIL FUELS NON FF

400 300 200 100

in growth, its overall share in renewable power is only 6.5%, although more homes in other nations are shifting to renewable sources of power. As the global population expands, the energy required to power the wheels of industry continues to grow. Compared to the modest energy needs of early humans, consumption today seems to have growing at an unprecedented pace. Global power usage per person is estimated to have grown by as much as 110 times from the early days of the industrial revolution. With each passing day, we are diminishing our resources at an alarming rate and the reliance on fossil fuels, primarily coal which still powers the majority of power stations is causing alarming environmental degradation. A full-scale introduction of renewable energy is now mooted as one potential ways of mitigating the effects of increasing power consumption. Fortunately home owners can do their part in reducing the burden on power stations.

2040

2020

2000

1980

1960

1940

1920

1900

1880

1860

1840

0 1820

S

olar energy is currently a hot issue as the United States, United Kingdom and the European Union consider imposing higher tariffs on Made-in-China photovoltaic cell imports flooding their markets and causing local solar panel producers to lose money. The battle for a larger share of the growing solar panel market is an offshoot of countries and the energy sector realising the huge income potential from renewable energy technologies, particularly when applied to the housing sector as more homes install solar panels and other technologies that tap sun, water and wind power to provide electricity to millions of homes as well as business establishments. The United Kingdom first saw the potential of tapping renewable energy in the mid-1990’s when it incorporated sources of renewable energy into its electricity grid through a small hydroelectricity generating capacity. By 2011, 9.4% of the electricity generated was provided by renewables, contributing 34.4 TWh of electricity generated. This motivated the UK to promote renewable energy systems, fuelled further by its aim to reduce carbon emissions. The UK’s genuine interest to push renewable utilisation is evident through commercial incentives such as the Renewable Obligation Certificate schemes, Feed in tariffs (FITs), and Renewable Heat Incentive. As the years passed, more nations jumped into renewable energy with the result that by 2011, Italy and Germany accounted for 57% of global renewable capacity growth. However, while solar power generation enjoyed an impressive 86% increase

A Finite Resource Perhaps one of the largest challenges facing both developing and developed countries is the gradual and ever accelerating depletion of nonrenewable natural resources, including fossil fuels. The reliance of industry on coal, oil, natural gas and other fossil fuels is simply unsustainable, It is not that industry itself is a ravenous beast that is determined to grow at any cost. Our reliance on fossil fuels is interwoven into the fabric of society at almost every level. The supply of electricity that powers the wheels of industry is dependent on fossil fuels. Yes the release of polluting by products is hugely problematic, however without these fossil fuels the fabric of modern society would simply disintegrate. To combat this growing problem, several countries have already shifted their focus to the deployment of renewable energies. The cost from collecting, harnessing and transporting the energy supplied through sustainable technologies can be enormous. The grids that supply power from non-sustainable sources must be adapted to the sometimes erratic supplies of sustainable power.


FEATURE O C T O B E R — N O V E M BER 2013

80

In summation, by 2025, the UCS forecasts that national renewable electricity standard would generate:

SINGAPOREANS' TOP 3 ENVIRONMENTAL CONCERNS

70

A USD $263.4 billion in new capital investment for renewable energy technologies

70%

60

B USD $13.5 billion in new landowner income biomass production and/or wind land lease payments

45%

40

40%

C USD $11.5 billion in new property tax revenue for local communities

20 0

AIR POLLUTION

GLOBAL WARMING

WATER POLLUTION

AWARENESS OF SOLAR AS A FROM OF RENEWABLE ENERGY IS HIGHEST 55% SOLAR

58% 59% 25%

WIND

53% 9%

HYDRO

37% 50% 41% 19% 26%

SINGAPORE VIETNAM MALAYSIA INDONESIA

11% 35% 8% 0

20

40

Aside from the continuous circulation of money in the local community, renewable electricity production would certainly reduce the need to spend on importing coal and natural gases from foreign countries. Not just that, fossil fuel consumption, which is also the primary culprit for global warming, can be greatly reduced too.

The Southeast Asian Perspective

49% 33%

BIO-MASS

Transition to renewable energies is a huge step. And the barrier to implementation on a regional scale is the huge cost of sustainable installations; at least those able to deliver the vast amounts of power that are today supplied through the burning of fossil fuels. Compared to conventional coal and oil, the International Energy Agency estimated that at least $13.5 trillion will have to be invested in promoting renewable energy by 2035. For developing countries gripped by economic crisis, such expenditures may not be feasible, particularly in the market that generally perceives renewable energies as more expensive and less competitive than costs of fossil fuel energy especially electricity derived from coal-burning power plants. However, there are those who firmly hold to the idea that renewable energy will be cost-effective in time, most especially if the manufacturing can be done on a large scale. Also, the demand for sustainable energy alternatives is largely dependent on the price. As observers put it, ‘demand for renewable energy will not improve unless prices drop to competitive levels’. Countries such as Denmark, Germany and Austria have taken the risk of converting a large amount of energy production capacity to renewable energy sources. Combining citizen participation and regional value creation, these countries have achieved largely positive results when rolling out renewable energy policies. In Germany alone, deployment of renewable energy paved the way for the creation of at least 380,000 jobs. There are other benefits. A study by the German Renewable Energy forecast that in 2012, German municipalities can raise at least EUR €1.2 billion (USD $1.6 billion) per year in tax revenue from renewable energy initiatives. The more the renewable energy industry thrives, the greater its contribution to the coffers of a country. However, there is a question as to whether these savings are real or the result of a shrewd manipulation of tax structures and incentivisation schemes. Many representatives of green leaning parties in these countries would respond that the end justifies the means when it comes to having a positive impact on the environment. Germany isn’t the sole country that benefits from the deployment of the renewable source energy. The US, too, has generated a whopping number of jobs in its wind energy industry.

60

*Unaided/spontaneous recognition of renewable energy sources SOURCE WWW.GREENBUSINESSTIMES.COM/2011/05/18/GE-ENERGYPOLL-INDICATES-THAT-MORE-THAN-9-IN-10-SINGAPOREANS-VIEWRENEWABLE-ENERGY-POSITIVELY-PRESS-RELEASES/

In 2011, some 75, 000 individuals were employed in various areas of competences such as manufacturing, project development, construction and turbine installation, operations and maintenance, transportation and logistics, and financial, legal, and consulting services. This is for wind energy alone, the macroeconomic benefits of other renewable energy technologies that employ even more workers may justify initial expenditures. To drive home the point, the Union of Concerned Scientists (UCS) studied the economic benefits of a 25% renewable energy standard by 2025. And the result gives all the more reason to push for more renewable energy ventures: "Creation of more than three times as many jobs, producing an equivalent amount of electricity from fossil fuels. Yes, we are looking at a 202,000 new jobs in 2025."

A recent survey of the attitudes of Singaporeans and Malaysians towards renewable energy and a sustainable approach to energy generation conducted by General Electric showed that the majority of Singaporeans believe that renewable energy solutions would be costly to install, but would be highly effective in the long run. The results also indicated that awareness surrounding the use of solar energy as renewable resource was highest, followed by the possibilities of wind and hydro energy. According to a senior GE source “the authorities need to continue their emphasis on energy efficiency, as it is probably as important as RE for a developed city state like Singapore. An International Energy Agency study states that supply side energy efficiency (SSE) technologies in power generation can potentially reduce greenhouse gas emissions by about 57% by 2030 versus 23% for RE technologies. Furthermore the cost of implementing SSE technologies for emissions abatement is cheaper than that for RE.” GE also commented that Singapore’s current focus on reducing unnecessary electricity demand through Smart Grid projects continues, in tandem with other initiatives, as both supply and demand-side measures continue to showcase Singapore as a leading example of how a country was tackling its carbon issues on all fronts. Overall, the results for Singapore were fairly similar to Malaysia in the poll, which also sampled sentiment on RE in Indonesia and Vietnam.

87


CONVERSATION OC TO BER — NO VEM BER 2 013

Practice what you Preach

GREEN ENERGY in Singapore

C

hristophe Inglin (CI), Managing Director of Phoenix Solar, a renewable energy solution provider in Singapore is convinced that solar energy can provide an ecofriendly and sustainable solution to the energy requirements of a resource poor island. And Christophe has put his money where his mouth is, turning his semi detached home in Singapore into a shining example of clean, sustainable energy usage. Property Life was intrigued.

PROPERTY LIFE: What motivated you to install

a green solution, aside from the very important fact that your company promotes the use of these money saving eco friendly energy solutions? Christophe Inglin: As someone who enjoys greenery and the outdoors, I have an interest in reducing my carbon footprint, and as an engineer, I am interested in technological solutions to achieve this while maintaining a comfortable standard of living.

PL: Makes sense. After all if you can combine aircon and green credentials we’re all for it. Didn’t this approach present you with certain challenges? CI: When we bought and renovated our semi-D in 2007-8, my wife and I worked with our architect and contractors to make the house energy-efficient and water-efficient. Along the way we had our share of the usual inconveniences that everyone puts up with when renovating their homes, nothing major.

88

CHRISTOPHE INGLIN MD Phoenix Solar.

PL: We notice that your home doesn’t seem to have been a radical departure form the designs we see on many streets in Singapore – is there any particular reason for sticking with the tried and proven? CI: The design harnesses traditional tropical wisdom like a long roof overhang to shield windows from direct sunlight, and good natural ventilation to avoid the need for air conditioning. We dispensed completely with aircon downstairs and installed it only upstairs, although we almost never use it. Instead, we have installed energy-efficient ceiling fans in every room. They use brushless DC motors and consume less than a third of the electricity used by a conventional ceiling fan. Where possible, such as in the case of the fridge-freezer, dish washer and washing machine, we selected the most energy efficient models available. As a result, our electricity consumption seldom exceeds 800kWh per month, or about two thirds of the average for a semi-D in Singapore. Our solar photovoltaic (PV) system converts sunlight to electricity and generates more than we consume, making ours a Zero Energy House. The PV modules also keep our house cooler by shielding most of the roof from the sun’s direct rays, reducing the roof temperature to around 15° cooler than a fully exposed roof. We also collect rainwater and store it in an underground tank. We use this to water the garden and wash the car, as well as to top up the pool when required. This helps reduce our monthly PUB water consumption to around 13m³ a month, compared to the national average of around 33m³ for a semi-detached home.

PL: It sounds as if you’ve achieved something remarkable. Can you tell us a little more about the technical aspects of the

installation for those who want to get under the skin of the solution? CI: Our solar photovoltaic (PV) system has a capacity of 8.58kilowatts-peak (kWp), split into two arrays – one on the east-facing and one on the west-facing roof flank. The PV modules are attached to aluminium rails, which in turn are attached to the metal roof by seam clamps, without penetrating the roof. There is therefore no danger of water leaking into the house. The PV arrays generate DC electricity. Each array is connected with special cables to a singlephase inverter, which converts DC to AC so it can feed the solar electricity into our switchboard, or AC distribution board (ACDB). To comply with the electrical code and to protect against surges, the system also includes circuit breakers and lightning surge arrestors. That’s about all there is to a residential PV system. You can add optional monitoring and data logging equipment to keep track of performance via the internet. We had to design our rainwater harvesting system ourselves, as it was not a common feature back in 2007. It is a simple design with a gravel filter to strain water that falls from the rear roof into a gutter, before collecting in a storage tank. The design had to ensure there is no access for mosquitoes to breed. Then a submersible electric pump feeds the water to a hosepipe.

PL: Important question – is your system proudly Singaporean? CI: Our house was one of the first to install a PV system in Singapore, well before manufacturers set up shop here. In those days, about the only locallymanufactured components were the aluminium mounting structures, which accounted for less than 10% of system cost.


CONVERSATION O C T O B E R — N O V E M BER 2013

Today, one of the world’s largest PV module manufacturers – REC Solar – has its factory in Tuas, and the PV modules comprise close to half of the PV system’s installed cost.

PL: Are there any differences in the performance of the green solution as opposed to standard electricity and water supply? CI: The house appliances cannot tell the difference between electricity from the PV system and from SP Services. The PV system operates completely autonomously with almost no intervention from the home owner. In the last five years, there were only three occasions where we had to reset one of the PV system’s circuit breakers that had tripped because of a very strong lightning storm. With the rainwater tank, the difference is more obvious. Rather than just switching on a regular water tap, we need to switch on an electric pump. And the pumped water pressure is lower than it is from the PUB supply.

Cleaning the rainwater system’s gravel filter is no more troublesome than most minor gardening tasks.

PL: How long would that cost take to amortise? If I continue to use it, how long will it take me to save enough money so that the system has effectively paid for itself? CI:For a 10kW system on a semi-D, it takes around 12 years. For a larger system on a bungalow, the payback period can drop below 10 years. For much larger systems of around 500kW on commercial buildings, payback is 7-8 years. These figures will also depend on the prevailing electricity tariff. They also depend on how much solar electricity is consumed in-house and how much is exported. Electricity consumed in house saves us the full retail tariff (currently 25.95 cents/kWh), while SP Services reimburses a lower rate of 20.90 cents/ kWh for excess electricity exported to the grid.

PL: How much money have you saved to date? CI: From installation in July 2008 until end of Au-

PL: What was the cost of the installation of gust 2013, our system has generated 60,000kWh the various components of the green solution? of clean electricity. About 25’000kWh of that was CI: When we installed it back in 2008, the price consumed in-house and saved us approximately was rather high and early adopters such as us would install PV for reasons beyond commercial viability – a combination of environmental consciousness and attraction to new technology. It is more relevant to consider the cost of a new system today, since costs have fallen a long way in the last two years alone. A 10kWp system - slightly bigger than ours – costs around SGD33’000 fully installed. That’s less than half the price of a COE, and offers much better value for money! It will pay for itself in less than a dozen years, assuming retail electricity tariffs do not change. If tariffs rise, then the PV system pays for itself faster.

SGD6,500, while the balance 35,000kWh was exported, earning SGD7’350. So our total savings come to around SGD13,850.

PL: Were there any legal or regulatory issues that had to be addressed? CI: These are quite straightforward if a qualified PV contractor does the installation. The contractor must engage a Licensed Electrical Worker (LEW) to endorse the electrical design and submit it to SP Services for approval. Then SP Services and the LEW must be present when the system is commissioned and switched on.

PL: Have Singaporeans embraced green PL: What sort of maintenance is required? technology? CI: Almost nothing. Since there are no moving CI: They certainly embrace it a lot more than in parts in the system apart from the cooling fan in most inverters, there is practically no wear and tear to worry about. And we get enough rain in Singapore to keep the PV modules clean, as long as they are correctly installed at a tilt angle of 10-15°. For the rainwater harvesting system, I need to lift the gutter cover and clean accumulated debris out the gravel filter every 6-12 months.

the past. This is partly due to government-led initiatives such as NEA’s energy efficiency ratings on electrical appliances, and BCA’s Green Mark programme for buildings. We also see much greater awareness, driven by the media covering green technology. The falling price of green technology has helped a lot, making it more economically viable. Whereas in the past, enthusiasts adopted green technology out of idealism, today many people have noticed that green technology actually saves them money. Harnessing it is just common sense!

PL: How much of a disruption is there to your day-to-day life when you use this system, are we going to readjusting solar panels or cleaning or filters every 30 minutes? CI: There is no disruption at all. Unless someone PL: What are the new technologies that we can pointed out the PV system, a house inhabitant expect in the near future? CI: We can look forward to more cost effective would have no reason to know it was there.

electricity storage technology that will integrate very well with PV systems, as well as being essential for electric vehicles (EVs). Besides being cleaner and quieter, EVs are far better suited to Singapore’s stop-and-go traffic than petrol and diesel vehicles are. We will also see advances in smart grid technology that will allow utilities to price electricity more accurately according to supply and demand. Appliances will be able to communicate with the electricity network and optimise their operating cycles to take advantage of the pricing signals. For example, EVs will adjust when they recharge according to the prevailing time-of-use tariffs. Heat reflective paints will improve the interior temperature of buildings, and spectrally selective glazing will screen out more heat while still letting in as much light as possible. These technologies already exist today, but are not yet widespread.

PL:Does the Singapore government incentivise the installation of green sustainable technology? CI: It does to an extent. NEA has some incentives for commercial buildings to upgrade energy-intensive equipment like aircon chillers, as well as subsidies to conduct energy audits. BCA offers some incentives to developers whose buildings achieve the highest Green Mark levels of GoldPLUS and Platinum. The government also has a budget to promote awareness of sustainable technology. But on the whole it keeps subsidies to a minimum, following the philosophy of minimising market distortions.

PL: Do you see an increasing number of green developments in Singapore? CI: Yes, certainly. Just look at how many new buildings are designed and built to higher level Green Mark standards. And now that they offer attractive financial returns, we are seeing larger PV systems being installed on commercial and industrial rooftops as well as on residential property.

PL: Well Christophe, thanks very much for your insight into what it takes for green solutions to be applied in the Singaporean context. If it can work on the ‘Little Red Dot’ we’re sure that the solution has got loads of potential elsewhere in the region. It certainly has the potential to save your household money as your figures show – so even for those who have only a vague idea of what it’s going to take to protect the increasingly fragile environment the solar solution seems to make perfect sense.

CI: A pleasure, look forward to chatting again soon.

89


FEATURE OC TO BER — NO VEM BER 2 013

An Italian fractional ownership renaissance For many the idea of factional ownership is linked to extremely bad memories of timeshare style scams. However, if the truth be told timeshare in itself was a attractive idea, hijacked by unscrupulous marketing operations. Fractional ownership is very similar to the older concept - with some very notable differences.

T

he value and quality of the properties involved in fractional ownership is usually higher than those traditionally found in timeshare ‘schemes’, many of which were simply excuses for unscrupulous developers to recoup capital invested in sub standard resort type destinations or even repurposed leisure assets that had been lying dormant for years. In some cases these moldering relics were given a facelift with a lick of paint and some cosmetic work to cover up the more obvious signs of decay and noncompliance to local building (and in some cases safety) codes. Today the shared ownership model is enjoying somewhat of a renaissance. Stricter controls and more savvy regulatory bodies, combined with the statutory overhaul of the rules and regulations governing the development and management of properties with multiple ‘owners’ have ensured that the global industry is more transpar-

90

ent than was the case during the timeshare boom times of the late 80’s and early 90’s. This is not to say that there are not fly by night operators in many countries across the world. But even amidst the gloom and doom (albeit slowly lifting gloom and doom) of a global economic recession there are some beacons of light in the darkness. One of these beacons seems to be Italy, where the search for la dolce vita (a life of pleasure and luxury) is alive and well, fueled by a thriving fractional ownership boom courtesy of savvy investors from all over the world, including increasing numbers from Asia.

THE LONG VIEW

For many people managing their own holiday properties is simply not an attractive prospect.

The reasons that Italy is experiencing high levels of interest from foreign investors do not require a degree in economics to understand. Good numbers of tourists, great weather, interesting landscapes, fascinating history and that number one best seller – beaches that deliver sun, sand and swimming as a nice balanced package. Some (if not most developers have been quick to capitalise on the promise of a Mediterranean climate. This sales tactic (which is not exactly a hard sell, Italy boasts some of the most stiunning beaches in the world) has also been given a shot in the arm due to public perceptions around the distinctly wobbly state of the Greek economy and even fears of social unrest in that traditional holiday destination. Although the Greek Islands may not have been as badly affected by the current pan Mediterranean meltdown the thinking amongst both holiday makers and long term investors is a version of the tried and proven, ‘once bitten twice shy’ mentality,


FEATURE O C T O B E R — N O V E M BER 2013

THE FACTS ITALIAN STYLE

Italy is still viewed by many as one of the most desirable lifestyle destinations.

combined with a healthy dose of skepticism around EU demands that authorities stem the flow of fiscal blood from the hemorrhaging Greek economy through debt restructuring. Other regional property darlings are also no longer what they once were. The rain in Spain falls mainly on an economy that is also giving holiday investors cause to question any potential property investment. Cold, hard statistics will be no comfort to other regional economies that rely on tourist and property investment for much of their income.So it’s spaghetti and Chianti time for many serious sun seekers. Asian investors, as well as holidaymakers (the two activities seem to go hand in hand) are also making their presence felt in the region. According to the World Tourism Organisation Chinese visitors to Italy have nearly doubled in numbers within the last three years. British tourists have long been fans of beach holidays, whether at home or abroad. The second edition of TravelSupermarket´s Travel Trends Tracker confirmed the fact, with survey respondents classing the beach as their top holiday destination for 2013 (27% of votes). The months of June, July and August were the most popular for holidays

A Almost 38 million tourists visited Italy in 2011 (World Tourism Organization) B Italy has over 6% of the world’s Blue Flag beaches (FEE) C Italy is extremely good value for money, both in terms of property investment and in terms of making that holiday Euro, Dollar, Yen or Yuan go that much further. D Italy ranked 2nd top European country for tourism (Eurostat) E 5th most popular destination globally (The World Bank) F 14% increase in foreign property buyers in 2012 worth €2.1  billion G Gourmet cuisine and widely acclaimed wines. H Great scenery and architecture. I Within easy reach of many quality transportation hubs. J Did we say good value for money in terms of, well everything that makes leisure time leisurely? We’ll say it again – Italy is great value for money.

planned in 2013, with 42% of respondents intending to take their holidays then – presumably due to the combination of better weather and school summer holidays. For those holidaying outside of the UK, Italy remains high on the list of popular countries, receiving just under 38 million visitors in 2011, according to World Tourism Organization’s latest Yearbook of Tourism Statistics. The World Bank has confirmed the country’s popularity, ranking it the world’s fifth most popular tourist destination.

So what is it that Italy has that enables it to capture the hearts of so many? It is perhaps easier to ask what it doesn’t have! Dawn Cavanagh-Hobbs, British founder of fractional ownership company Appassionata, who moved to Italy with her family in 2007, explains the country’s draw, “There’s just something about Italy that delights the senses. The sights, the sounds, the scents… this country has so much to offer. My family and I have settled in Le Marche, nestled between the Sibillini Mountains and the Adriatic Sea. The beaches near us are incredible – within just 10 km we have Pedaso, Cupra Marittima and Grottamare, all of which are Blue Flag beaches, so perfect for days out with the family.” The Blue Flag is awarded by the Foundation for Environmental Education (FEE) to beaches which meet strict criteria in relation to safety, water quality, environmental management and other factors. The Le Marche region has an impressive total of 29 Blue Flags, out of 248 in total across Italy. But, as Dawn comments, it’s not just the beach that attracts visitors to Italy, “Spending time outdoors in the sunshine, engaging in healthy and fulfilling activities, is such a key part of Italian life. At Appassionata we have built this traditional lifestyle into the design of properties, to enable our owners to get the most out of their holidays here.” So Italy obviously has some expats that are more than willing to sing the county’s praises (and the praises of the

91


FEATURE OC TO BER — NO VEM BER 2013

fractional ownership model) but how should the potential buyer sort the wheat of truth from the chaff of marketing speak? Well, here the skinny on the Appassionata offering. Casa Giacomo and Casa Leopardi, the two dream homes that Dawn’s family have renovated, are set in five acres of land, which features olive groves, a lavender plantation, a truffle orchard and a 48 row vineyard. Owners – who have exclusive use of their chosen property for five weeks of every year – share in the estate’s organic produce and are welcomed to join in the seasonal activities related to nurturing and harvesting the crops. The vineyard, once mature, should produce around 5,000 bottles of wine per year, which will be shared between just 20 owners. Now that’s a little different from the timeshare model that has fallen into such disrepute. Ownership of your own share in a Lilliputian vineyard is a definite attraction. You’ll hardly be toiling from dawn to dusk, but the fruits of your capital, if not your labour will grace your table. As our American friends say; Neat. It is the availability of properties with vineyards – and the produce thereof – which has led to an interesting trend in Italy’s tourism figures. Based on the World Tourism Organisation’s latest Yearbook of Tourism Statistics, Chinese visitors to Italy have increased dramatically in recent years, from just under 700,000 in 2009 to almost 1.3 million in 2011.

92

New figures from Eurostat have placed Italy as the joint second (tied with France) European country for tourism. The figures are further supported by the latest residential research report from Knight Frank, which state that sales volumes in 2012/13 have strengthened, as international buyers look for long-term lifestyle purchases rather than short-term investment gains. International Residential Researcher Kate Everett-Allen comments, “Despite the economic malaise, Knight Frank’s Italian team agreed a record number of sales in 2012/13, up by 50% yearon-year.” These statistics may well be linked (at least in part) to the growing fondness across China and Hong Kong for overseas homes with vineyards, which has this year seen auction house Christie’s to launch Vineyards by Christie’s International Real Estate specifically for the Asian market. The service combines Christie’s real estate and fine wines divisions in the first offering of its kind. Fractional ownership is not the only property trend that shows Italy in a good light. Buying a second home in Italy has

ASIAN INTEREST Increasing numbers of Asian investors are interested in the Italian market.

also become increasingly attractive to foreign buyers. According to data from the Scenari Immobiliari research institute, 2012 saw an increase of 14% in second home sales to overseas buyers, with sales totalling €2.1 billion. The majority of buyers (almost 40%) were German, while 18% were British and 13% Russian. This mix of foreign buyers is supported by new flights to many of Italy’s airports, with Russia’s Sheremetyevo International Airport recently announcing its summer flight schedule, which includes flights to a range of Italian airports. Italy’s Ancona airport is attracting particular interest, with Montenegro Airlines operating charters there during the summer months and Darwin Airline beginning four daily flights from Ancona to Rome from June 2013 in a code share with Alitalia. Flights to Ancona also operate from Albania, Germany, Belgium, Egypt, England and Sweden, as well as numerous internal Italian destinations. So from Chinese tycoons investing in vineyards, well to do investors from Russia and Germany, to British families snatching a few weeks in the sun, it seems as if Italy has found the formula for tourist success and the fractional ownership model seems to be providing an attractive option for many savvy travellers and holiday makers. Combine this with an increasing appetite for traditional property investment in Italy and it appears that there may be a growing property renaissance taking place in the country.


FEATURE O C T O B E R — N O V E M BER 2013

MARKETING MANIA

How to maximise your holiday rental investment.

Investing in a buy-to-let property is one thing but maximising your investment in an increasingly cutthroat and competitive market is quite another. What do the experts say about marketing and holiday rental incomes? BY VITTORIO HERNANDEZ

O

wning a buy-to-let home is just one part of the investment equation. Property investors who want significant returns from their holiday home purchase must know the tricks of the marketing trade in order to get the most out of their units. Experts in the holiday rental industry have forged their marketing experience in one of the most cut-throat businesses in the world, and their collected wisdom learned during the day-to-day running of their buy-to-let properties is worth its weight in platinum level marketing MBA’s. While there is no foolproof step-bystep guide, advice from experts, a keen sense of business, having a right property at the right time and a healthy dose of good luck will all play their role in the successful marketing of your holiday rental. Read on potential landlord.

1

LOCATION LOCATION LOCATION

Similar to buying a property that will serve as your home, one of the major considerations (besides cost) is of course location. Once you have established the investment parameters for your holiday rental unit, the next step is to choose a good location. In a normal home, criteria would likely include proximity to offices, schools (if you have or plan to have kids), shopping centres, churches, hospitals, public transportation and government offices. With holiday homes these criteria are important, but may be supplemented by other considerations.

Many holidaymakers want eye-catching scenery and an environment vastly different from their usual daily life, making properties along beaches, waterways or quiet locations such as farms and mountaintops popular choices. Determining a location also involves looking into climatic conditions during both the high season and the low season. Remember, in order to offset your investment costs, it is essential that the revenue stream from your property rental activity is maximised year round. It’s no good being booked out for school holidays and having to pay rates and taxes on an unoccupied rental property for the rest of the year - this is a real concern, but there are ways to mitigate this problem. Properties on the equator may not have the temperature swings that are experienced in other parts of the world and the holiday season can be longer. However be aware that ocean currents which influence swimming conditions and rainfall patterns differ markedly during the course of the year. Monsoon season for instance can be particularly unpleasant for holidaying on the equator. However, that said many vacationers are sun worshippers, so if your target market consists of people with family sized squeeze bottles of suntan lotion in their bags, then your best bet is the tropics. If your clients are into skiing, go for spots that have mountaintops and snow at least for the majority of the year. You may still be able to rent out your property during times when the snow is absent – many properties at higher elevations have easy access to superior hiking trails and nature walks – take advantage of the diary of year round attractions.

If you’re hoping to take advantage of a key attraction, such as a theme park then take note that the closer you are to the main attraction, the higher your rentals will be. Website Invesscomm provides an example of buyto-let homes in Florida, home of Disneyland. ‘When rental income is important however, the correct location of the property is crucial, and rental income will be maximized when the property is located within a 20 minute drive of Disney World. Outside this area, and even marginally outside, rental demand will fall off very quickly and very substantially’, Invesscomm said. A final criterion is the proximity to your home base, because ideally you would need to occasionally visit the property. Preferably, your buy-to-let property should be within the same region. Otherwise, expensive plane fares and other travel expenses could eat all the bulk of your income from the rentals. For those investors contemplating investing in property outside of the borders of the country within which they reside it may be a good idea to evaluate the services of a property management agency.

2

GO ONLINE

Some of your envious friends may have noticed that you just bought a holiday home in the Caribbean or some exotic island in the Pacific, especially after you posted your surfing and sun worshipping photos on Facebook. So you can expect a few calls enquiring about the availability of the property at special ‘friend and acquaintance’ rates. Make sure that you keep in mind the fact that your property is an investment first and foremost. Freeloaders aside, how many of your FB friends can afford to fly to halfway across the globe to spend a week in your holiday home?

93


FEATURE OC TO BER — NO VEM BER 2013

You need to expand your reach, and the best way to do that is go online. The increasing use of travel and vacation portals means that Internet advertising is a highly effective method of telling the world about your holiday rental home. Your potential renter is in all probability relying on the Internet to find a perfect vacation spot – and if you’re not taking up some search engine result real estate chances are you’re losing out on opportunities to maximise your imcome. Internet advertising is constant and targeted. It’s on a relevant website 24/7. Add to this the fact that more and more people are going online and less are buying newspapers and magazines and the use of the Internet to advertise holiday rentals is an absolute no brainer. The website holidaylettings.co.uk recommends that you need not own a website to promote your property. Rather, you can just sign up with good holiday home websites, which will then market a holiday home on your behalf. Among the criteria in choosing a holiday home website are traffic numbers (visitor numbers), extras offered such as SMS text alerts whenever there are enquiries and other value added services. Always look for real testimonials from users of these websites – make sure that you can contact those who have supplied testimonials, and make the effort to get hold of them to gauge success rates – because of the low buy in required there are plenty of fly by night website operators out there – make sure that you are not taken in by a flashy site and promises. When in doubt insist on paying only for results. If you opt to create your own website, that’s great, because it gives you greater control over content and design. Always make sure that your designer, or advisor is able to offer you services or advice on how to increase your chances of appearing on the first or at least the second page of any search results. Without optimizing your search engine results much of your marketing efforts will be wasted.

3

ADD EXTRA TOUCHES

Standard rooms traditionally belong to hotels and larger establishments that cater to tourists. Vacation homes are different from those in the sense that the owner should create an atmosphere vastly different from the usual bed-and-bath offerings. This differentiation is absolutely essential in order to avoid the ‘cookie cutter’ image of chain hotels.

94

The website iknow-uk.com cites as an example a rental home with bedrooms that have bunk beds and children’s play equipment in the garden. This venue could best be marketed as a family vacation home. Since family often includes small children prone to accidents, the website recommends that the property owner add extras such as a stair gate, high chair and a selection of toys and games so you can advertise it as a child-friendly cottage. Other extras that are recommended by iknow (which do not cost the property owner much) include tea, coffee and fresh milk, fresh bread and butter, condiments, high quality cotton towels, home entertainment systems and DVDs, a barbecue grill and coals, and a microwave. The rule of thumb is that add-ons need not cost the Earth, as long as they add value to the experience of the renter. It is more the ambiance and the attention to detail that will win you repeat customers. For those with money to spare, the following high end extras will appreciated by renters and will add significantly to potential rental income, as well as adding value to the property itself. Hot tubs, swimming pools, flat screen TV’s, dishwashers, washing machines and dryers, bicycles and high end patio furniture all fall into this category. Also, enever forget that as with any service industry your key to success is to build a relationship with your customer base. For added value and that personal touch a local hamper and champagne, chocolate and flowers to welcome renters upon arrival will create those memorable moments that mean repeat business.

4

WORTH A THOUSAND WORDS

The website schofields.ltd. uk stressed the value of image in promoting your rental property. So your next step is to hire a professional photographer and videographer to take images of your rental property. Have them take indoor and outdoor shots, which should include people in the photos to drive home the point that your property attracts renters. When people choose a vacation spot, the house is just one link in the chain of value that makes up the entire holiday experience. They have chosen your venue because of a landmark or natural attraction in the area, such as waterfalls, beaches, caves so make sure that these are included in any marketing outreaches. Don’t hesi-

tate to reach out to local tourism authorities, as they will usually be delighted to supply you with high-resolution images, which are suitable for use in both printed material and on websites.

5

CONSULT THE CALENDAR

While there are vacationers all year, the bulk of people are too busy dealing with work and school obligations to have time for R&R. Most people time their vacation to coincide with major holidays such as Easter, summer vacation and the festive season at year end when there are more red-letter days on the calendar, which means they cut down on the requirements to use valuable vacation days. When these major holiday seasons approach then it’s time to boost your marketing efforts by suiting your advertising pitch to match the occasion. For instance, if your holiday home is in a sun-kissed tropical paradise in Thailand, the hot months of March to May are the best times to make your sales pitch, positioning your property as the best place to engage in a bout of sun worship while harnessing the rays to get that oh so stylish bronzed look. It all boils down to perfect timing. However, it’s a fact of life that save for a few exceptions, holiday homes are subject to the laws of supply and demand governed by peak and lean seasons. There will likely be fewer renters during lean seasons – which are often the rainy months in the tropics or the winter months in the west, except if your rental unit is in a ski resort of course. And during peak seasons, there would naturally be more potential clients. Use the down season to perform any maintenance and once that has been completed reduce your rates. You might be pleasantly surprised to find out how many people just need a weekend break to recharge their batteries, rather than a full holiday experience Which brings us to the last point common among tourist-related enterprises. During peak seasons you can charge higher rates, but during lean seasons, to entice renters, you may have to give some discounts to entice potential clients. Be sure to communicate these price changes on your website, especially the off-season discounts in order to increase your chances of continuous flow of renters throughout the 12 months of the year in order to really maximise that potential income.


Singapore Urban Redevelopment Authority (URA) Q2 2013

Residential Property Property index: 214.9 (+1.7 points or + .8%) Non-landed properties

Core Central Region (CCR)

− 0.2% (up 49% since 2009)

Rest of Central Region (RCR) + 0.2% Outside Central Region

+ 3%

Developers’ sales volume for June 2013: 2,119 sold

SRX Property Index August 2013

Non-landed private residential sales

SRX Property Index Legend: Core Central Region (CCR) Rest of Central Region (RCR) Outside Central Region Based on the SRX Property Index (SPI), resale prices of non-landed private residential units increased by 1.5% in Aug 2013, reaching a new high. This comes on the heels of a 0.5% drop in July and amid mild fluctuations in the recent months. All three regions showed price gains in the past month. Rest of Central Region (RCR) led the trend by gaining 2.4%, followed by Core Central Region’s (CCR) 1.8% increase. Outside Central Region (OCR) prices also inched up by 0.2%. An estimated 540 non-landed homes were resold in August, similar to July’s 573 units. On a year-on-year basis, this represents a more than 50% drop from the 1,240 units transacted in Aug 2012. Non-landed private residential rentals

Based on the non-landed residential rental SPI subindex, overall rental prices for non-landed private residential in August slipped by 0.1% from July. On a regional basis, rental prices inthe CCR and RCR softened by 0.2% and 0.1% respectively, while OCR's rents strengthened by 0.5%. HDB resale and rental

Overall HDB Cash-Over-Valuation (COV) dropped $2,000 in Jul to reach $18,000 - the lowest since July 2009, when the overall COV was $10,000. The lowest COV by region is in Punggol HDB Executives where 2 out of a total of 3 transactions last month were sold below valuation. The median COV was -$13,000. On the flip side, the highest COV is seen in Bishan HDB Executives where the median COV was $120,000. Overall HDB resale prices slipped 0.7% in July, marking the fourth consecutive monthly drop in resale prices. This marks the first time prices have dropped by four consecutive months since Jan 2006. HDB resale volume remained relatively flat. According to flash estimates, 1,280 HDB flats were sold in the resale market in August, similar to July's 1,286 resale cases. Year-on-year, August's resale volume represented a 29% drop from the same period in 2012. An estimated 1,560 HDB flats were rented in August 2013, down by 3% compared to July. However, this number exceeded the 1,392 HDB rental transactions in August last year by 12%. All prices in Singapore Dollar (SGD)

News

Cooling measures, Singapore prices, liveability SEPTEMBER 2013 The government’s recent property cooling measures are relevant and necessary to avoid a major price correction once economic conditions change, said the Ministry of National Development (MND). It noted that market activity continues to be strong despite the slowdown in housing demand and price growth. In fact, prices continue to climb while interest rates remain unrealistically low. The MND noted that the cooling measures were introduced to ensure that the property market grows in a stable and sustainable manner. Collectively, they serve to encourage prudence amongst buyers and dampen speculative activity. The measures were also implemented as external economic developments affect the country’s property market. Specifically, the normalising of interest rates could present significant financial risks to buyers as well as prudential risks to the overall economy. PRICES TO BENEFIT MALAYSIA Singapore’s skyrocketing property prices will benefit Malaysian properties, especially those located within Iskandar Malaysia, revealed Credit Suisse. “Singapore has the means but lack of land, while Johor has abundance of land but lack of means,” said Yvonne Voon, Equity Research Analyst at Credit Suisse, speaking at a real estate forum in Petaling Jaya. After 20 years of ongoing disputes, the relationship between the two countries has turned rosy, allowing Singaporean companies to leverage their status in Malaysia. “Property prices in Singapore are very unlikely to fall. Nowadays, even real estate giants like CapitaLand Ltd come to Malaysia as the island is running out of land,” noted Voon. The Singapore government’s review of its Master Plan to convert the use of in particular industrial land could see industrial players relocating to Iskandar, she said. “It has not gone unnoticed that there are many industrial land parcels in Singapore that are on leasehold basis. Should the government zone it out for other purposes, the industrial companies will have to move their cranes and machineries to Johor,” concluded Voon. SINGAPORE LIVEABILITY RISES Singapore’s liveability rating has risen by 0.2 percent from 2008 to 88.7 percent, the Economist Intelligence Unit revealed in its latest report for 2013. The island is now ranked in 52nd place among the 140 cities monitored.

“Liveability often seems static on a year-to-year basis. But looking at movements over a longer period we see some significant trends emerging. The improvement in Singapore highlights the increasing availability of cultural activities,” noted Jon Copestake, editor of the report.

Singapore Monetary Authority According to the Managing Director of the Singapore Monetary Authority, Ravi Menon: ▪ Home loans increased by 18% for each of the past three years. As a percentage of GDP, home loans are at 46% (up from 35% three years ago). ▪ An estimated 10% of loan borrowers in Singapore have repayments that exceed 60% of their income. If mortgage rates rise, lower-income households may feel a significant strain.

July to end of September 2013 Highest prices per square foot, condos/apartments:

$4,720

▪District 9

(Orchard, Cairnhill, River Valley)

Highest prices per square foot, landed properties:

$2,922

▪District 10

(Bukit Timah, Holland Road, Tanglin)

▪District 4

(Telok Blangah, Harbourfront)

▪Sentosa

Top three condo/apartment developments by sales volumes 1 J Gateway – 579 2 Twin Fountains – 138 3 Jewel @ Buangkok – 119

Top three condo/apartment developments by rental volumes 1 Waterbank at Dakota – 186 2 City Square Residences – 101 3 NV Residences – 101

95


FEATURE OC TO BER — NO VEM BER 2 013

The Fiat 500

Adding value to your rental home through the provision of a set of cool wheels.

O

ne of the ways to maximise your rental revenue is by supplying value added services to those wishing to make their temporary home at your beach front investment property. One of the easiest ways to do this is to make some classy wheels available for the duration of their stay in paradise. And we all know that if you’re enjoying the sun and sea there’s really only one correct way to make every minute count – and that’s with a convertible. So without further ado, let Property Life present you with five of the best open top motoring experiences on planet Earth.

96

This is a car that simply oozes cuteness from every pore. If there was ever a small automobile that would add value to the holiday experience it is the Fiat 500C. It’s a point worth making that this isn’t really a convertible in the truest sense. The Fiat 500C is rather a small car with the potential to feel the wind blowing in your hair without having to resort to winding down the window. When the top is down the 500C doesn’t supply the classic convertible experience, the door frames and the roof rails remain an integral part of the experience. On the plus side it means that the side profile of the 500C remains true to its coupe origins, meaning that the endearing looks that made it such an iconic little automobile when it was launched remain the same, a definite plus. Small families may enjoy the fact that the kids are not going to be tempted to let it all hang out at the mercy of passing tree limbs and errant cyclists so this automotive beach house buddy is ideal for a couple with a few tiny tots in tow. Another plus for beach front use is that the 500C has received top marks from various reviewers when it comes to handling substandard tarmac. Skinny tires notwithstanding the auto gearbox and the sporty suspension make this little wonder surprisingly sure footed and delivers above average ride comfort for a car of these distinctly Lilliputian dimensions. If the 500C is placed in a head to head handling competition with the Mini Cooper, or the iconic Mazda Miata it’s going to come out at the bottom of the pile. However, in the cuteness stakes this is a car that shines and for those who want to really get into the holiday spirit this may be the perfect little runabout. PROS 1 Cute as a button – grins smiles and waves from an admiring road side audience. 2 Easy to operate ragtop. 3 Good handling. 4 Top up noise suppression. 5 Lots of nooks, crannies and cup holders – useful for the holiday crowd. 6 Fairly nippy for a 1.4 liter motor. 7 Simple but functional interior. 8 Great value for money. CONS 1 Not a classic convertible. 2 Not quite as frugal on the gas consumption as many would like. 3 This really is not a big car. 4 Some may find the Euro styled interior a bit bland.

© FAMILIE GEVAERTS / FLICKR

Beach Buggies

(with the enormous sun roof that is easily confused with a soft top)


FEATURE O C T O B E R — N O V E M BER 2013

Volkswagen Beetle

CONVERTIBLE

Mini Cooper CONVERTIBLE

The Mini Cooper convertible oozes British style, from the pugnacious front end to the classic but reinvented rear end the Mini is one of the most popular small convertibles on the market today, and for good reason. The drop top version of the Mini is significantly larger than its iconic forbearers with enough space in the front for two generously proportioned adults and sufficient legroom in the rear for a couple of smaller people or some fairly largish kids. The space alone makes the Mini Cooper convertible the ideal compliment to any holiday experience and will delight even the most picky of holidaymakers who are engaging in a short term lease. As an added attraction folding down the back seats frees up enough cargo space to make grocery shopping at a self catering holiday venue a breeze. The Mini offers an engaging driving experience and nimble response courtesy of a 1.6 liter in-line 4 cylinder engine, while the suspension setup will smooth out any problems that might be experienced while navigating poorly maintained coastal or inland roads. A characteristic that many adventurous holiday makers will appreciate. PROS 1 One of the most iconic modern day convertibles.

© FROM TOP: THE CAR SPY, SARAHLARSON / FLICKR

2 The Mini boasts enough space for four – with enough legroom to make for a comfortable holiday experience 3 Nimble and powerful performance, even from the entry level models 4 Good base specifications

CONS 1 The interior readouts and secondary controls, although Mini to the core may annoy some drivers.

A couple of years ago Volkswagen introduced their more ‘masculine’ take on the new Beetle but we'll be honest, we have yet to meet the man who is going to leap into the convertible version of this topless wonder without first having some serious doubts about whether the minus points might just be enough to get his man card revoked. However, that said the cute and cuddly convertible version of the Beetle might just be tolerable enough as a vacation car, after all even the most masculine of men needs to let his hair down a little when it comes to his holiday arrangements.

which is especially useful in Southeast Asia where the next rain shower can be only minutes away.

the swinging 60’s, but you’re going to avoid the sniffles that accompanied the decidedly user unfriendly old school task of putting up the roof in a shower because this top lifts and lowers in around 10 seconds,

When all is said and done this is a fun car, it’s great for that much needed respite from the worries and cares of the rat race and who knows, maybe that new wave 60’s styling will help you get a little of your groove back.

The Beetles engine has now moved from its 60’s situation at the rear of the automobile and there’s now a handy trunk available for stowage of all those essential holiday items, but beware space is extremely limited. On the plus side the rear seats can be folded back increasing the amount of storage space.

Finishes are good, but almost everything has that plastic fiesta touch, so don’t expect walnut paneling in this drop top, not that the original scored any big points in the style As for couples with kids, the new convertstakes, but we like t think that times have ible Beetle might be just what the doctor changed a bit. ordered when it comes to fun in the sun and some holiday laughs. Kit out the new Power is a bit underwhelming for the entry Beetle with some of the retro hubcaps that level 2.5 liter engine, but when you’re melare now available and you’re starting to get lowing out on your vacation driving it like some seriously cool mileage under the belt. you stole it is probably the last thing on your The old school ragtop also harks back to mind.

PROS 1 Enough of 60’s feel to bring a smile to your face. 2 Can seat four in relative comfort. 3 Speedy lowering and raising of the fabric roof which is great at keeping out the rain 4 New gen bug has a clean set of dials 5 Great range of power plants available 6 Those retro hubcabs – old school is cool CONS 1 May still be a bit of a ladies car – if you’re a lady ignore this potential problem.

2 Not the cheapest of options – especially when optional extras are added.

97


FEATURE OC TO BER — NO VEM BER 2 013

This reinvention of the classic American icon is just about as recognisable as a politically incorrect pack of Marlboros. It’s big (for a two door automobile), brash and it sits high on the road, perfect for taking in the view at those crowded holiday beauty spots. Although it must be said that if you’re using this vastly capable off roader to merely view the sun and surf you might be doing yourself a disservice. This 4 x 4 is more than capable of taking the rough stuff in its stride, so for those investors looking to attract a rental income from their slightly out of the way holiday home this might be just the vehicle to us if you want to attract the more adventurous crowd. The Jeep Wrangler limited edition Rubicon model provides possibly a polar opposite to the cutesy Volkswagen Beetle convertible mentioned elsewhere in this article. While many SUV’s have become more crossover in design and function, throwing off their outback credentials in favour of a city slicker demeanor the Jeep Wrangler has stayed true to its roots. This vehicle is more than capable of tackling some of the harshest off road conditions that nature can throw at it. Removing the doors and roof transforms the vehicle into a fun ready mode of holiday transport that other vehicles will find difficult to match. There are a few nods to comfort in the latest models of the Wrangler. Keeping the hadle operated windows (woah – OLD school) company is a perfectly adequate six speaker sound system with steering wheel mounted controls and cruise control. However if you’re fairly sift spoken or are using the Wrangler as honeymoon transport you’re going to find whispering sweet nothings into your loved ones ear a bit of a challenge. This motor vehicle is by no means quiet and the 3.6 liter V6 is not going to make using your inside voice a particularly rewarding experience. The Jeep’s Spartan good looks and minimal nods to interior finishes may not endear it to some, but as a holiday vehicle which will be faced with sand, alt, mud and possibly spilled soft drinks and dropped hot dogs it is just about perfect.

PROS 1 It’ll get you out of trouble on a bad road with a minimum of fuss and bother. 2 Removing the doors and roof results in a motoring experience that is pure joy. 3 Easy to clean. CONS 1 Thirsty as a cowboy after a long day on the range. 2 Spartan interior. 3 Somewhat limited space in the back. 4 If you tried to tell someone it was noisy at top speed while in the car they wouldn’t hear you. 5 Not exactly a pinpoint steering setup.

Best Classic Option

The Mazda MX-5 / Miata

Small, lightweight and a joy to drive, the Mazda Miata (as it is known in the United States) is a classic, beloved by a rabid group of enthusiasts across the world and well worth the care that must be lavished on the older models in order to keep them in tip top shape. The Miata is not the best selling two door convertible sports car ever made for nothing. This car has won accolades from motoring journalists and prestigious design awards ever since the first models were launched way back in 1989. The Miata has gone through several incarnations since the original, but all have featured the tried and proven monocoque construction and progressively more powerful engines. The 20th anniversary edition featured both the beloved soft top version and a manual gearbox, or an alternative in the power retractable hard top version which twinned an automatic gearbox to the 1.8 liter power plant available in Europe and a 2.0 liter available elsewhere in the world. If you want to really add value to your holiday home by providing a seriously fun experience for those who choose to rent accommodation from you, then the Mazda MX-5 / Miata will certainly do the trick. However it’s worth noting that this is a car for two. The kids are not going to be happy. In fact they’re not going to be happy and they’re not going to be on board. Top Gear’s Jeremy Clarkson heaped praise on the MX-5 in 2009 when he said; “The fact is that if you want a sports car, the MX-5 is perfect. Nothing on the road will give you better value. Nothing will give you so much fun. The only reason I’m giving it five stars is because I can’t give it 14."

PROS 1 It’s been around for many, many years and is a classic for a reason. 2 More fun than a barrel full of wild sea horses. 3 Small package, but dynamite performance combined with impeccable road manners – it goes like a go kart. 4 Lovely exhaust noise. 5 Fun without pretension. 6 Sport models can be had for a song – considering the pedigree. CONS 1 Those who own one are loath to give them up. 2 The older models may come with some wear and tear baggage that requires attention.

So there you have it, five choices of open top excitement for those who really want to see return visits from the visitors who rent out their holiday accommodation. If the hotel around the corner or down the coast is renting out Mopeds then the addition of a convertible is going to seriously up the game when you mention it in your marketing. It’s certainly an option worth exploring.

98

© FROM TOP: KINGROBERTII / FLICKR; STEVE IYON / WIKIMEDIA COMMONS

Jeep Wrangler


FEATURE O C T O B E R — N O V E M BER 2013

A holiday home?

That's so pre-economic downturn. Many investors have been finding out that the income generated by their beachfront or mountainside property can add considerably to their enjoyment of the annual family vacation. So how can investors make sure that their rental property delivers returns that make a real difference to their enjoyment of a well-earned break?

H

oliday homes have often been viewed as substantial lifestyle investment. Most holiday homes are the foundations upon which memories are built and where families are allowed time to grow closer and enjoy a respite from the everyday pressures that sometimes can weigh heavily on relationships and the ties that bind us together. The investment in the classic holiday home is therefore an investment in the happiness of both friends and family, something that has long been recognised as priceless. However, today many families are realising that tough economic conditions call for an more level headed approach to once underperforming assets, including the family holiday home. This is why many vacation home owners are looking at ways to make their investment work for them, either delivering a superior return that can be invested elsewhere or else using the income generated by a holiday home to offset the costs incurred when the family actually wants to take that long overdue vacation. Your holiday home can make their dream come true. Holidays for many mean disconnecting from the hustle and bustle of daily life and your vacation rental should reflect such an atmosphere. Therefore decorating a holiday home may differ from decorating your own home, especially where the holiday home may double as an income-producing asset to offset the cost of your annual

vacation. Your holiday home needs to be a cosy, relaxing place where the renters would like to return, as well as recommend to their friends. Remember that their good reviews can mean that your rental business starts to really contribute to your income. Property Life will also be examining how to maximise your rental income by adding value through significant investment in assets that will elevate your income-producing asset from the good to the great.

To get you started here is a guide to decorating your holiday home:

1

Work around a theme

Vacationers look for a break from their usual surrounding when on a holiday which is why it is of utmost importance to give them a feel of something different. To start with, think about decoration ideas inspired by the natural surroundings of your holiday home. If the cottage is located on the beach choose a nautical theme, if it is a cabin in the woods, choose a more rustic feel for the decor.

2

Cheerful interiors

A coat of fresh wall paint can instantly make a place feel fresh and re-energised. Bright colours can make the most basic dĂŠcor pop. Bright colours are attractive and add a jolt of energy into the house. But walls painted in bright, striking colours might not go down well with a lot of renters, instead

refurbish old furniture with bright paint. Stick to neutral shades for the walls and add a pop of colour here and there. A red chest of drawers or a yellow table will look pretty and will work well. Free, downloadable wall art is an easy option of adding colour to the blank walls. Frame quirky images and typography that is both engaging and beautiful to look at. Websites like Pinterest offer a selection of free downloadable graphics. Bright colours can be great mood enhancers so if your guests happen to arrive on a rainy day, bright colours inside the house will ensure that they remain upbeat about the vacation. It is a good idea to update the paint scheme regularly.

3

Furniture

Measure the floor area before investing in furniture. Large pieces in a small space is a waste of precious square feet area and will make the room feel boxed. For the living room, Instead of large couches it is a good idea to invest in sleek, mid-century modern armchairs that are comfortable and can be easily moved around. Remember to that there must be a seat in the living room for every person sleeping in the house. So, if your holiday rental sleeps a maximum of eight guests there must be enough space to seat all eight together in the living room and on the dining table. A good guideline for decorating and furnishing holiday rentals is to keep the decoration minimalist and fuss free.

99


FEATURE OC TO BER — NO VEM BER 2013

Avoid furniture pieces that are too expensive or heirloom pieces. There are bound to be accidents and you might not want to incur a huge loss on your prized possessions. On the other hand, some vacationers might feel an obligation to take care of your expensive furniture and may feel overwhelmed with the idea of being cautious around these pieces. This is their vacation and they would want to sit back while the kids create a mess.

4

Furnishing

Choose heavy, durable upholstery that can be cleaned easily and does not show early signs of wear and tear. Removable slipcovers are an excellent way to update old sofas without too much investment. Choose heavy drapes in neutral shades that block the light when required. Block –out curtains offer the guests an option of napping in the afternoon or waking up long after sunrise. Invest in good quality linen for the bedroom along with well fluffed pillows and warm blankets. Choose darker colours with prints if you expect a lot of teenagers and young adults. Darker linen is much more durable and does not soil easily if the young guests decide to plop on the bed with suntan oil or muddy shoes. Older guests usually prefer pure white linen with high thread counts are comfortable and well starched. White linen is usually presumed to be high maintenance but unlike darker colours and printed linen, whites can be easily bleached to get rid of the stains. Whites also add a relaxing, spa feel to the room.

5

Rugs

If you expect sandy feet or wet ski boots in the house all the time, you may want to do away with area rugs altogether. A horrible stain on your rug will be difficult and expensive to get rid of. If you feel the need for an area rug, purchase washable ones that do not require heavy vacuuming every week and can be thrown into the washing machine once in a while. For a beach house consider using natural fibre rugs that are both durable and easy to clean. Sisal and sea grass rugs fit well with nautical themed décor.

100

6

Décor

Keep the décor to the minimum, and it need not be expensive. Work around the theme you have created for the holiday home and blend in the décor with the surroundings. A bowl of shells, old wine bottles entwined in jute, pebbles, live plants and driftwood can make interesting vignettes. Hang wind chimes and garden lanterns for a special touch. Provide candles on the deck for the guests to light up and soak in a romantic sunset. The holiday home is not the best place to display your collection of antique sculptures or your ornate crockery collection. There is also no need for extra lamps if there is sufficient lighting in the rooms. Remember that placing anything extra increases the chances of damage to your property. Keep anything that you do not intend the guests to use locked up in a cupboard clearly marked as personal.

7

Kitchen

The kitchen is one place where you must make adequate arrangements and add some extras. Stock the kitchen with durable crockery, cutlery, bowls, bakeware and glasses in the most commonly used shapes and sizes. Avoid anything too fragile or fancy, it is always easy to find replacements in common colours like white. Don't forget the kitchen essentials like napkins, towels, mitts and gloves along with a dish washing liquid. Ensure that all your kitchen appliances are working well to avoid any hassles. Make a manual with clear instructions on how to use the appliances. Create a list of inventory in the kitchen and provide a copy to the renters to avoid any issues when they check out.

8

Add a personal touch

Even though all through the article you have been advised to keep away from adding elements that reflect you personality, a little personal touch will go a long way with the prospective renters. Create a Welcome Pack with details about the eateries in the vicinity, convenience stores and tips on how to make the best out of the vacation. Put

in pictures of your favourite spots around the area and interesting stories from the locals. Leave a fridge magnet with emergency contact numbers, map of the area and other such details. Personal touches like a phone call to check if your guests have settled in well will make your guests feel special and cared for even when you are not around. You can be a great host and keep your guests busy by arranging a cupboard with interesting board games like chess and scrabble, puzzles, and toys. Hang a hammock or an outdoor swing and create a reading nook for those who like to read peacefully during their time off.

9

Curb appeal Make the most of

your investment by ensuring that the exteriors look as beautiful as the interiors. Hire a property management company to ensure that lawns are manicured from time to time. Place beautiful potted plants and foliage to add a green appeal. The colour green is relaxing to the eyes and adds freshness to the atmosphere. Greenery will also help in keeping your property cool in the warmer months. If possible, get your property professionally photographed before listing it on rental websites. Most guests will choose one property over another depending on the photographs they view online rather than visiting the property before booking. You may have the best décor but if the photos don’t appeal to the prospective renters, they will overlook your listing.

10

Eliminate clutter that accumulates in the drawers and cupboards from time to time and maintain a minimalistic feel. Vacationers want a stress free, easy time off and extra space will give them the freedom to put their feet up and relax. Think about the people who would be renting your holiday home and then evaluate if you would pay the price for a house like the one you are decorating. It is a good idea to create a list of expectations from an ideal vacation home that you would like to rent and work toward matching those. View your holiday home critically through the eyes of the renter and decorate accordingly.


FEATURE O C T O B E R — N O V E M BER 2013

Singapore’s favourite

holiday rental destinations following the investment trail

If you want to enjoy the best that holiday rental investment can offer follow the people holding the red and gold Merlion passports – they’ll have the inside track on how best to put your money to work. BY JONALYN FORTUNO

I

f there is one place in Asia where the posh lifestyle and luxury supercars are just part of the scenery, it would probably be in Singapore. This citystate may appear to be just a small dot on the Asian map, but it’s gargantuan insofar as the sheer volume of wealth and conspicuous consumption is concerned. Although this small country only has about 5 million people roaming its streets and not everyone is driving a brand name convertible one should never underestimate the wealth that lies beneath the surface of even the most mundane exteriors. One in every six of these households has more than one million dollars worth of assets, one of the underlying reasons behind Singapore’s reputation as home to the highest density of millionaires in the world. The Singapore property market is the second priciest in Asia, beaten to top spot only by Hong Kong. Traditionally, Singapore is a safe haven for real estate investments, thanks to its excellent economy, low tax rates and robust GDP, which is one of the highest in the world. These attributes make Singapore a great fit for the investment strategies of many overseas buyers, who are attracted by the possibility of great returns powered by a strong real estate market (some would say too strong and caution against overconfidence). However, the strong demand amid low interest rates and high liquidity in the economy heats the market to such an extent that a property bubble is a real threat. In order to cool down the property market the Singapore government has aggressively rolled out cool-

OLD FAITHFUL Thailand remains a firm favourite.

ing measures. The stricter curbs amid ballooning property values forced the pricedout investors to retreat from the market. In fact, even the wealthy Singaporeans have decided to flee and park their cash elsewhere (to a greater or lesser extent – the Italian sports and German luxury sedan car markets is not exactly hemorrhaging clients). And because Singapore’s wealthy still have a lot of spare cash to burn, they make ideal targets for developers and estate agents around the world eager to find at least one bright and shining light amidst the gloom and doom of global property markets. In order for investors to get their share of Singaporean wealth they will have to do a little homework to find out where Singaporeans regularly go on holiday (and lately are investing some of their idle property investment cash). To make that task even easier, Property Life has researched the top 5 countries where Singapore’s ultra wealthy come out to play on those rare occasions when they can stand to be parted from the Bentley, Benz or Bugatti.

A MALAYSIA

The warming relationship between neighbours Malaysia and Singapore is clearly demonstrated in the proposal to jointly develop Iskandar, a developing township in Johor Malaysia. Although these two countries have not been exactly been on BFF terms in past years this has not prevented Singaporean’s from making property investment decisions that involve funneling some of their hard earned cash across the straits and further up into the Malaysian interior in their search for holiday property investment. Singaporeans view Malaysia as a gateway to inexpensive and easy to access holiday homes and rentals. In part this is due to the latter’s close proximity which means a journey of less than an hour (traffic and customs permitting) to the entrance of Malaysia across the Straits of Johor. In a recent article entitled ‘Singaporeans are picking up the travel bug’, the author wrote that Malaysia is of great interest to Singaporeans as it offers wide shopping experiences, food and culture, and most especially hill resorts which allow Singaporean’s to escape the hot and humid conditions.

101


FEATURE OC TO BER — NO VEM BER 2013

Singaporeans are the biggest contributor to Malaysia’s tourist numbers, accounting for nearly 52% of total visitors. Investors looking for some hard facts to back up any investment decisions will be interested to know that the United Nations World Tourism Organisation (UNWTO) ranked Malaysia as the 9th most visited country in 2012 with 25.03 million tourist arrivals in that year alone. When it comes to the perennial favourite playgrounds for Singapore’s wealthy, Kuala Lumpur, Iskander in Johor and Penang are always welcome distractions. Malaysia’s popularity with investors has a lot to do with its foreigner-friendly investment policies. Unlike many other Asian countries such as Indonesia, Thailand and Singapore, the Malaysian government allows foreigners to purchase leasehold and freehold properties. The Singapore Business Review, perhaps summed it up best when they wrote that there is ‘a clear advantage of property purchases in Malaysia (due to) the fact that there is an organised, systematic, and well-regulated property ownership regime where generally, the same set of laws apply to both locals and foreigners’. According to Property Showrooms, the huge influx of tourists in Malaysia has created a robust demand for holiday accommodation, particularly in coastal regions where luxury resorts can be found. Kuala Lumpur, is proving an evergreen investment destination in the holiday rental business, with yields between 7.4% and 8.7% and average house prices of RM 497,535 (USD $164, 241). Add a steady growth in visitor numbers, which are expected to grow to 9.2 million within the next 12 months, bringing in roughly USD $7.8 revenue and KL’s attractiveness becomes even more understandable. Penang is also an extremely attractive investment destination. This state has recently experienced a robust demand for homes, which, according to the Real Estate and Housing Developers Association (REHDA), Penang, is likely to drive the growth in property sector by about 5-10% during 2013.

102

The attractive prices in Penang, coupled with the influx of tourists, are a perfect recipe for the success of a buy-to-let venture. Rental yield stands at 4.06%, while the average house price is at RM450,000 (USD $135,685). Expatriate Lifestyle wrote that the relatively low prices in the state has made it an ‘attractive place to invest property in, whether as an investment opportunity or merely as a second holiday home’. The same thing can be said for Iskander, which just recently saw a ‘feverish buying interest’ from the investors, hoping to take advantage of the opportunities, which this fast-developing region presents.

B INDONESIA

Forget about the ’hazy’ past, Indonesia remains a favourite of Singaporeans be it as an investment hub or holiday destination. Just like in Malaysia, Singapore travellers are the backbone of Indonesian tourism, helping the country to generate a total of IDR 321.57 trillion (USD $29..8 billion), which accounted for 3.9% of the national GDP in 2012. Reports on Indonesia Tourism Performance in 2012 showed that Indonesia played host to at least 1,271,443 Singaporeans, which has led the tourism sector to up their target by 1,750,000 for 2013. They are likely to hit the target with ease. The latest data from the Tourism and Creative Economy Ministry showed that during the January-March period alone Indonesia logged 306,836 Singaporean tourists arriving in the country. According to Global Property Guide, property in Indonesia is extremely good

MIXING IT UP A mix of cultural diversity and developing property options makes Southeast Asia tremendously attractive.

value, citing Jakarta and Bali as potential places for buy-to-let with their ‘reasonable price’ and attractive rental yield. It’s no secret that these two cities represent real value, but as usual there are challenges that need to be overcome before an investor becomes too excited about the potential of the market. First and foremost of these challenges are the region’s notorious and widespread restrictions on foreign ownership of property. Foreign buyers can however always enjoy the Right of Use or Hak Pakai, which expires after 25 years but can be renewed for another 25 to 35 years. These barriers to a long-term outlook notwithstanding, Jakarta and Bali hold a promise of good returns. In Jakarta, the buy-to-let option is a popular choice among foreign investors due to the excellent rental yield ranging from 9.9% to 13%. Prices, on the other hand, stand between USD $1,500 and USD $1,552 per square metre. The island of Bali is also a focus of investor interest. Bali-based Real Estate Indonesia Chairman Dewa Putu Selawa said that one of the key factors that fuel the real estate market in this province is the annual economic growth at 6.6%, which exceeds national economic growth of 6.1%. In June 2013 alone, tourist arrivals surged by 15.7% to 275,617 compared with the same period a year ago. And if this is not enough encouragement to investors, the Bali tourism board plans to attract 2.8 million tourists this 2013. This could only mean that investors should be quick on their feet and start testing the buy-to-let market climate in Bali ASAP.

C THAILAND

There were no surprises when Property Life analysed the annual tourism statistics supplied by sites such as Skyscanner, which revealed that Thailand topped the list of all time favourite holiday destinations of Singaporean travellers. The Oxford Business Group remarked that the country’s real estate market, particularly in


FEATURE O C T O B E R — N O V E M BER 2013

Bangkok, continues to be very attractive to both foreigners and domestic investors. The letting market is also on track to post healthy growth. According to Property Showrooms, the buy-to-let market in Thailand is set to grow as the influx of tourists along with the government’s goal to increase the figures by 10% per annum, fueling the need for more short-term accommodation. Property Showrooms also added that property buyers in Thailand are ‘capitalising on the popularity of the destination and current low prices with a view of achieving maximum returns on investment from their buy-tolet options’. When it comes to tourist hotspots in Thailand where buy-to-let investors are seeing superior returns, Global Property Guide singles out Bangkok as one of the cities that posts high rental yields. In this city, it’s the smaller apartments that fare better than the larger properties, with a 7.41% yield, on the back of property prices ranging from USD $3,000 to USD $3,300 per square metre. Besides Bangkok, Pattaya and Phuket are also offering strong buy-to-let potential primarily due to their rising popularity as holiday destinations. Investment firm Knight Knox International said that Pattaya has recently moved into the limelight as droves of overseas buyers started to recognise thea investment potential that this city provides. According to the firm’s senior property consultant, Lee Chettoe, ‘There has been a noticeable uplift in the amount of enquiries we have received for apartments in Pattaya, particularly from British investors, which has allowed us to expand our portfolio considerably, to cater for the surge in demand’. Property prices range from USD $1,396 to USD $1,868 per square metre depending on the location in Pattaya.

D PHILIPPINES

The Philippines remains popular with Singaporean travellers. Although the country did not make the cut for a place as one of the top five tourism markets for visitors from the ‘little red dot’, travelers from Singapore still accounted for at least 86,290 tourist arrivals for the first half this year. This figure is a significant increase over the 73,015 (16.17% growth rate) Singaporean travellers who visited the Philippines in the same period last year. The Gulf News wrote that one of the main reasons why foreign buyers have developed a strong appetite for Philippine property is that prices represent excellent value.

DREAM ON Hong Kong and its many attractions still entrance tourists from Southeast Asia and further afield. Despite high property prices there is still great opportunity in the territory.

Colliers International is also positive about the country. The company sounded an upbeat note in its Asia Real Estate 2013 Forecast, which predicted that the market would continue to exhibit strong growth potential all through 2013 ‘due to the anticipated economic growth in 2013 and the sustained occupational demand from expatriates’. When it comes to growth of rents and prices, the firm said that they anticipate a slowing of growth to 9.5% and 6.2% respectively, largely due to the 2,800 new units coming onto the market, representing 12% growth year-on-year. Based on Global Property Guide research, investors can expect a gross rental yield of 8.62%. For a higher yield though, a 250-square metre condominium unit can generate as much as 9% while potential yields for a 70-square metre unit can be as high as 10%. An average property price is around USD $2,807 per square metre. Holiday Home Times named three residential areas south of the Metro Manila area as popular choices for buy-to-let investors looking to establish holiday homes. These areas include Alabang, Tagaytay and Batangas, which are considered as popular tourist spots or as residential suburbs.

E HONG KONG

In the most recent survey of MasterCard on the consumer purchase priorities, it was revealed that Hong Kong comes in second in the list of Singaporean’s most preferred destinations after Australia. In an interview with Travel Daily Asia, Patricia Auyeoung, acting group CEO of the

National Association of Travel Agents Singapore, said the result is not surprising at all as the mentioned countries ‘represent much of what Singaporeans love about travel, whether it is for good food, shopping, sightseeing, or even just enjoying different seasons.’ With 48.6 million tourists visiting Hong Kong in 2012 things are certainly not looking gloomy for the tourism industry on the tiny enclave of free market economics. Hong Kong is a metropolis that has managed to integrate a vibrant tourist hotspot with world beating shopping districts, world-class restaurants and centuries-old temples, heritage sites, and other tourist attractions into a cohesive whole that delivers excitement and relaxation in equal measure. According to the senior sales manager at Hong Kong Property’s Taikoo Shing branch, Rick Wan, the April-June period is traditionally a low season for the leasing market. But once the month of July rolls around, rents will automatically pick up as families go about their business hunting for rental homes to live in at the start of summer holidays. In a report released by Hong Kong’s Economic Analysis Division, it was stated that the ‘leasing market was buoyant with overall (apartment) rentals recording a marked gain of 11% in December 2012 over a year earlier’. Small to mediumsized flats saw a 12% increase in rental incomes, which is significantly higher than the 5% rental growth of large flats. Although rental yield in Hong Kong is significantly lower (at 3%) when compared to neighbouring countries, this should not dissuade buy-to-let investors. All things considered, the low yield is more than made up for by a potential number of travellers who are likely to occupy holiday rental home.

103


AFTERWORDS

A Alexander Knight Managing Director and Publisher Panashco Media Singapore

104

FROM THE PUBLISHER.

s we approach the final quarter of 2013 it is clear that we are living in an age where access to global information has given us a greater insight into the events that are shaping our lives. In late September a hail of gunfire swept the Gateway Mall in Nairobi, Kenya. At last count, over 60 people, ranging from small children to the elderly, have been brutally murdered. Panashco Media is part Panashco Group, which has offices in Mombasa, Kenya (a town that saw an organised terrorist attack in 2002) and we employ professionals from all over the globe, including Kenyans, who are a vital part of our operations. Inevitably there are people in that office who will be touched by the shocking events that unfolded. A city will count the cost of the dead and the wounded. Kenyans will question whether they are safe in their beds, whether their children are safe in their schools and whether a trip to do the monthly shopping or enjoy a cup of coffee at the local mall will end in tragedy. What has this got to do with property, the main theme of this magazine? Although amidst this pain of this tragedy it might seem trivial to talk about mate-

rial assets and investments, the attack on Nairobi is an indication of how fragile property markets can be. Recent statistics have shown that Nairobi (that is until this weekend) was viewed as a haven from the danger and unrest that characterises some parts of the country’s East African neighbourhood. Property prices in the suburbs of Nairobi were steadily increasing and many foreign investors were excited about the idea that a residential boom in Nairobi could be the start of an East African property renaissance. That hope will now be subjected to the brutal realities of living in a region where terrorism, not economics will make or break a property market. In the Managing Editors Note, Steve spoke about how property is more than just a roof and four walls. Investment is driven by infrastructure development in the neighborhood and access to lifestyle amenities, among other issues. He is absolutely correct. Without the above, as well as property rights governed by sensible rules, regulation and protection of ownership, investment simply will not flourish. However, security trumps all – without it investment dries up and a property market stagnates. Without security there will be no East African property renaissance.


Property Life Magazine October November 2013  

The culture and cuisine issue - plus the regular market round ups and London property focus, Italian fractional ownership, Asian investment...

Read more
Read more
Similar to
Popular now
Just for you