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26 August, 2015
The UK, mainland Europe and the US are all becoming expensive investment markets, and many asset types remain uncertain at best. This is leading many investors to look for opportunities further afield, and when you're looking at property then you may find that much of Asia proves hard to beat when it comes to income.
The recession has been officially over for some time, but the recovery process is still very much ongoing and for much of the world it's a slow process indeed. Many Asian markets, however, are bucking this trend and, in relative terms at least, powering ahead of the rest of the globe.
This is certainly not hindered by population numbers, with around half of all people in the world being found in the Asia Pacific region. Many of these populations are growing fast, and this is helped in some markets by an increasing number of wealthy expats from various other parts of the world, and the result is strong demand for residential property. However, Asia has a lot more than just sheer numbers in its favour; it is also home to a number of reform-focussed governments who are actively pursuing more sustainable growth models as they recover from the global financial crisis. While some markets in the Middle East have been hit by falling oil prices of late, others such as Abu Dhabi have weathered the storm exceptionally well thanks to governments who actively make an effort to keep their economies diverse and not over-rely on one sector.
This is all good news from the investor's point of view, and the area in which many Asian markets truly excel is in the potential income on offer. As a result of growing demand and increasing desirability, many Asian markets from the Middle East to the edge of the map are delivering both strong rents and excellent capital growth. Often, from a pure income point of view the prime opportunities are in more emergent markets, such as Malaysia, rather than in long-established, popular prime markets such as Hong Kong. Another good example is Thailand, which is recovering well from political instability as well as undergoing a shift from an emphasis on luxury properties towards more mid-level developments. This is creating strong opportunities and respectable growth, particularly in the mid-level properties which are becoming increasingly popular at the expense of the top end of the market.
For those who prefer to invest less directly in property, through shares or bonds providing exposure to development companies, opportunities are similarly strong. Many Asian stock, bond and gilt markets are outperforming their counterparts in the West, and the climate among Asian businesses as a whole is strong with some experts predicting an increase in dividends. Developers are naturally not exempted from this generally favourable business climate, and benefit from the strong property markets in many Asian countries over and above this backdrop.
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