Real estate in Southeast Asia remains one of the preferred vehicles for global investors. A growing middle class, surging tourist arrivals and solid economic numbers are all reasons why the region has seen an influx of property investment in the past few years.
Investors have been particularly impressed with condominium rental yields in some of Asia’s emerging cities. This doesn’t mean these markets are a sure thing. But they do provide investors with an opportunity for a higher return on investment than currently available in “safe haven” markets such as Singapore or London.
Read More: 6 ways to improve your rental yield
Here are a few of the cities in Southeast Asia with the best condo rental yields:
International investors are already familiar with the Thai capital as buyers from Hong Kong, China and Singapore among the most active. JLL noted that rental yields at luxury condominiums in Bangkok’s CBD are shrinking, currently averaging around four percent, but remain impressive in fringe areas connected to mass transit lines.
According to Nexus Property, condominium rental yields for units along Ratchadaphisek Road between Ratchada and Rama IX roads come in at more than 5.5 percent annually while select projects in Bang Na have also surpassed this threshold. With more mass transit lines already under construction across Bangkok, this could unlock the real estate potential of several more neighbourhoods.
Neighbourhood in demand: Bearing
While it may no longer be the last stop on the BTS Sukhumvit Line, it is blooming into an up-and-coming destination. Similar to On Nut a few year’s back, the potential of Bearing is being realised by savvy investors while the area is built up. For example, units at Niche MONO Sukhumvit Bearing from Sena Development and its Japanese partner Hankyu Realty were quickly booked shortly after launching in 2017.
It can be difficult for overseas investors to purchase a condominium in Indonesia. The process is complex and the regulations and restrictions are murky at best. At the moment, foreigners can buy and own property for a period of 30 years. This can be extended up to 70 years and there is hope the government opens this up even further. Even with these restrictions in place, there are benefits for those who navigate this cumbersome challenge.
Rental yields for condominiums can reach up to nine percent in some locations around Jakarta with strong domestic demand leading to rising prices. Research from Cushman & Wakefield found that the rental market and serviced apartment market continues to grow in the capital city.
Neighbourhood in demand: South Jakarta
Having been popular with expatriates for decades, South Jakarta features a robust rental market with strong fundamentals. Research from Colliers International Indonesia found more expatriates renting houses in South Jakarta during the second half of 2017 with the activity found throughout the area. Additionally, more domestic renters have begun moving into this part of Jakarta.
No list about condominium rental yields would be complete without Manila where they sit between six and nine percent depending on the location, according to property experts. Among the most exciting locations are Pasay and Parañaque which are both home to large shopping malls, casinos and resorts. Overseas interest in Manila real estate is expected to increase in 2018.
“I think it’s because of the good relations between the Philippines and China. But it’s also because of a strong property market—ability to come here and buy property at reasonable price and get attractive yields. I think the fundamentals of the economy and real estate are rock solid,” Santos Knight Frank chairman and CEO Rick Santos explained during a press conference.
Neighbourhood in demand: Mandaluyong
Known as the “Tiger City of the Philippines”, Mandaluyong has grown mightily this decade. It is now home to several world-class shopping centres along with EDSA Central and Pioneer, two emerging business districts. This area is home to several BPO companies which has propelled demand for rental properties. The condominium rental yields at some projects is as high as ten percent.