Affordable Property in South East Asia

Country:  Cambodia; Malaysia; Thailand; Thailand

The romantic dream of owning a second property in a tropical destination can easily be realised in South-East Asia, where property is still very affordable and there is a range of glamorous locations to choose from.

This area of the globe is perfect for winter sun seekers; however, as with all tropical locations, humidity can be an issue and each destination has a prolonged rainy season. The best time of year to visit Thailand and Cambodia for cooler, drier weather is generally November to March, while visitors to Malaysia will get less rain from April to October.

All of these emerging markets offer lifestyles and property markets as hot as the weather, so grab a beachside seat while you can.

Property in Cambodia

Now shaking off of its troubled past, Cambodia is imitating the success of neighbouring countries and has seen enormous growth recently, while tourism has rocketed with three million visitors expected to be arriving annually by 2010. All of which means there has been a rush from investors keen to get into property in Cambodia. 

Rory Hunter of developer Brocon says the key location to buy property is in Phnom Penh, the capital, with its elegant colonial-era avenues and river setting. “Phnom Penh is the hotbed for international investors, as there are apartments with a relatively low entry price point.” He isn’t as convinced that other tourist destinations, such, as Siem Reap and Sihanoukville, are right for individuals. “While there is considerable development, these [areas] don't offer an easy way in.”

The elegant capital is a mix of character buildings, many of which have been refurbished, and swanky new apartment blocks. Phnom Penh property prices range widely, depending on location, style and age, with tiny apartments in need of refurbishment in less sought-after areas costing from around £30,000 and small villas from £50,000, with anything larger or renovated from £100,000.

David Stanley Redfern, currently selling apartments in Phnom Penh’s posh French quarter, claims there’s a rush to buy Phnom Penh property, partly spurred on by increased investment in infrastructure and tourism. “Naturally this has made price rises astronomical,” he says. Redfern puts annual appreciation at 15 to 20 per cent but says property prices are still climbing. “It’s likely that prices will soon get silly,” he adds.

This means rental yields are not as lucrative as you might expect. Redfern’s development comes with a nine per cent rental guarantee; however, the Global Property Guide claims returns can be as low as 4.6 per cent.

Rory Hunter says Cambodia’s islands are also where mainstream investment is headed. Brocon is one of a number of companies in the early stages of luxury resort projects off the coast, although there is currently little in the way of information about potential properties.

Property buyers are also attracted by the relaxation of the rules on foreign ownership and laws forcing developers to offer buyers financial protection. Foreigners may own property in Cambodia above the ground floor in apartment buildings but not land, which can only be owned via renewable lease of up to 99 years. It’s possible to set up a company through which to own but two nationals must be directors of the company with the foreign buyer holding the majority share.

With interest in Cambodia property on the rise, getting your foot in the door now might be a sensible option.

Property in Thailand

The past few years has seen Thailand become firmly established, with property buyers piling into coastal and city property in Thailand, attracted by average annual appreciation of ten per cent. 

Cosmopolitan Bangkok property has been a hit with buy-to-let landlords, hoping to cash in on rental yields of around seven per cent. However, those who want a sun-drenched second home with potential for rental are choosing coastal resorts such as Pattaya and Hua Hin or popular islands such as Phuket and Koh Samui.

Henri Young of local developer Raimon Land, which offers luxury projects in all the main destinations, says Thailand property market is still booming despite recent political upheaval. “Many [buyers] realise that, at today’s prices, buying property in Thailand still represents excellent value compared to other resort destinations,” he says. “Thailand’s property market for foreign investors remains incredibly resilient and we find most prudent investors are taking a long-term view.”

Jay Walker, of eco-development The Village on Coconut Island, near Phuket, agrees that the appeal of Thailand is still very strong. “Tourism is increasing and demand for property in Thailand is growing,” he says. “There are still buyers wanting prime Thailand property as an investment and holiday home.”

Walker is offering a seven per cent guaranteed rental yield on his two- to five-bedroom villas, priced from £302,950, and says owners in most resorts could expect to get between six and eight per cent, though he anticipates returns nearer to 12 to 15 per cent in time.

Alistair Powell of Seven Continent Investment, which is marketing property in Pattaya from under £50,000, adds that Thailand offers not just lifestyle gains but financial incentives. “The entry level for property in Thailand is significantly lower, than in more established European locations. Furthermore, there’s no capital gains tax for private investors.”

The main issue for overseas buyers is the lack of ability to own land freehold, though there are ways to get round this. One is to buy an apartment in a development in which foreigners are allowed to buy up to 48 per cent of available units. The other is to buy via renewable 30-year leases. It’s more straightforward to own in Thailand than it seems and, for a taste of paradise, may be well worth the extra effort.

Property in Malaysia

The Malaysian government has been actively encouraging overseas investment via its My Second Home scheme for several years. The initiative offers a range of tax breaks and visa options to prospective residents, and with stunning coastline, world-class healthcare and education, plus luxury property in Malaysia costing from under £100,000, it’s no surprise investors have begun to pour in. 

A fair number of buy-to-let investors have been drawn to property in Kuala Lumpur, the capital, who have been keen to own apartments from around £80,000 and family homes in gated communities from around £200,000, though the main destinations for buying property in Malaysia tend to be coastal resorts within an hour of the city. One of the most popular is property in Port Dickson where apartments start at around £45,000 and water villas from £80,000, while the tropical islands of Penang and Langkawi are also key destinations with prices starting at around £600 per square metre.

The Sepang Gold Coast, in particular, is drawing property buyers, due to the new F1 circuit and the Golden Palm, a large-scale resort development that, when complete, will include numerous leisure and retail options, water villas and several shoreline villages, with prices starting at around £70,000.

“Malaysia is a very nice holiday destination with enormous potential,” says Alistair Powell of Seven Continent Investment, which is currently selling on the Sepang Gold Coast. “It also has one of the fastest growing economies in the region and prices are appreciating well.”

With average appreciation in Kuala Lumpur of ten per cent and as much as 14 per cent on the coast, and rental yields at a healthy seven per cent, Powell says his company is seeing many buyers keen to “get in at an early stage”.

The country also offers what John Scott of Asset Property Brokers calls “one of the lowest costs of living in Asia”. Scott also points out that it’s easier for non-nationals to own property in Malaysia freehold or on leases of up to 99 years, which is more favourable than property in Thailand. “Malaysia ticks many boxes for buyers,” he says, “it’s a safe, stable country and a superb location.”

First published in December 2008.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.

See Also:   Cambodia, Malaysia, Thailand

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