The economic downturn has had one positive effect: buying a holiday home on an Asian or Australian beach need no longer be a dream, writes SONIA KOLESNIKOV-JESSOP

With clear blue seas and nearby pristine white-sand beaches lined with coconut trees, Asia Pacific resort properties have always held an international appeal. In recent years, European buyers had been particularly active in this market in South-East Asia, especially in Thailand, getting used to the often complicated and restrictive ownership rules for foreign nationals.

The recent economic crisis has put a dampener on activity across the region – with certain markets such as Thailand and Australia more affected than others – but Robert Collins, CEO at Savills in Thailand, says overall prices seem to be rebounding quickly and long-term prospects remain strong.

“Sales volumes have been very thin this year, except perhaps in Vietnam where the buying trend has been predominantly driven by local buyers,” explains Collins. “Now is probably a good time to buy. The expectation at the moment is that prices will sit where they are for now, but still start to quickly appreciate again when sales volumes and tourism pick up.”

Collins noted that while the high-end beachfront properties in Thailand are mainly bought by European and Hong Kong buyers, the Bali property market is more dominated by Australia, as the island is closer to home and easier to get to for short breaks.

THAILAND

PHUKET

One of Asia’s top markets for vacation villas, Phuket has experienced a slowdown in common with markets around the world. The military coup of 2006 which deposed former prime minister Thaksin Shinawatra and then the disruption to April 2009’s ASEAN meeting made the market even more nervous. Maybe more worrying than the political instability for investors has been the government’s dithering over revising the Foreign Business Act, which has prompted many to wait until a decision is finally made, says Tom Travers, managing partner of Indigo Real Estate.

Overall, prices are now down about 30% from the heydays of 2005–2006, but they have held steady throughout 2009 as sellers have been holding firm. “There is not a lot of downward pressure because this is a cash market and there is not a lot of supply or inventory, especially at the luxury end,” Travers notes. “The majority of owners are not prepared to discount anymore.”

The most sought-after areas for residential properties are found north of the tourist centre of Patong, on the west coast around Kamala and Surin beaches. Although there are no properties actually available on the public beaches, a five-bedroom villa will start at around US$3 million for about 2,000 sq m of built-up area.

Dexter Norville, head of estate management with Jones Lang LaSalle in Phuket notes there are also very interesting developments on the east of the island, such as The Bay at Cape Yanu, where prices start at around US$1.9 million for a villa of around 1,200 sq m. Malaiwana in Nai Thon Beach is another beautiful villa estate, with only nine plots, all of which have stunning ocean views and start at about US$3.8 million.

Travers believes one upcoming area is Natai Beach, which is on the mainland opposite Phuket and only 20 minutes’ drive from the airport. The area is being touted as the ‘Palm Beach of Thailand’, thanks to its 2km of nearly untouched beachfront. Several properties there have been pitched at the high end, including Sava Luxury Villas and Aleenta Resort & Spa, which has a residential component. A three-bedroom Aleenta Resort beachfront villa of 589 sq m with a 21-metre private beach frontage is on the market for US$1.13 million, while a Sava Natai six-bedroom villa of 1,300 sq m is on offer for US$3.75 million.

KOH SAMUI

Lesser known than Phuket in the villa market, Koh Samui has recently raised its profile on investors’ radars, thanks in large part to two developments: the opening of a new airport terminal in 2007, which can accommodate more passengers; and the decision by several luxury hotels such as Four Seasons, W Hotels, Banyan Tree and Six Senses to open on the island. The award-winning Estates Samui, adjacent to the Four Seasons resort, has 14 villas cradled on a hillside overlooking one of the most pristine stretches of beaches on the island. Villa prices there range from US$3.5 to 4.3 million. The Conrad and W Hotels, still under construction, have both introduced real estate opportunities as part of their development. The Conrad Koh Samui Residences, which will be completed in the fourth quarter of 2010 and located in the south of the island, has made a few sales. A two-bedroom pool villa of about 370 sq m costs US$1.31 million. While the market has been sluggish, Tavers says overall activity has been picking up since the summer.

Restrictions: Under current laws, land ownership is restricted, however different ownership structures allow foreigners to acquire real estate, usually on a 30-year lease with the possibility to renew twice. If you intend to rent your property out, note that rental earned by foreign owners is subject to a 15% withholding tax

SINGAPORE

After a couple of years of double-digit increases, prices for luxury residential properties in Singapore started going south in late 2007. By the first quarter of 2009, the market had fallen back to levels last seen in early 2007, down on average 30%. But now, after five consecutive quarters of decline, the luxury segment is starting to rise again.

SENTOSA COVE

Still under development, Sentosa Cove is an exclusive, gated-access enclave on Sentosa island with 420 houses and 1,720 condominium units planned. Land parcels for houses were first sold for US$2,314 per sq m in 2003, but by the time the last parcel was sold in 2009, prices had risen to US$14,101 per sq m. Plots for landed homes range from 650 sq m to 1,115 sq m in size. So far, about 60% of buyers have been foreign nationals, paying high prices for the privilege to moor boats at their doorsteps. Condominium units in the area are priced around US$14,316 per sq m on average, however the recently launched 41-unit Seven Palms condo, the only one in Singapore right on a beach, is selling units at around US$26,500 per sq m, or US$6.1 million per unit and up, making it one of the priciest condominium developments in Singapore. The project will be completed by December 2013.

Restrictions: Some constraints apply to buying landed property, except in the Sentosa Cove area, where foreigners can buy without having permanent resident status.

INDONESIA

BALI

Property prices have risen 20-25% annually in the last couple of years, slowly closing the differential gap that used to exist with Phuket. Because banks do not lend to foreigners and nearly all properties are bought in cash, the Balinese market has been somewhat protected from the sharp property price downturn elsewhere. Those buying a property on Bali tend to be mostly Asia-based expatriates looking for a vacation home or an investment to rent out. Investment yields are typically around 6-7% net.

Property development has been largely restricted to the south, close to the airport and the capital, Denpasar.

In this area, Seminyak remains the priciest property area due to its proximity to Kuta beach. There, a four-bedroom property on 1,800 sq m of land will cost about US$800,000. A property with a view of the ocean can cost two to three times more. Houses in Ubud, in the centre of the island, are much cheaper. A five-bedroom home on about 2,000 sq m of land here will cost about US$425,000.

At the top end of the market, the Bulgari Residences development, which will be completed in 2011 in the Bukit Peninsula (in the lesser developed, southern end of the island), offers five luxury units ranging from 1,164 sq m to 1,330 sq m on land of 1,705 sq m to 4,415 sq m each. The villas with spectacular Indian Ocean views and access to a private beach are priced from US$6 million upwards.

BATAM

A 45-minute ferry ride from Singapore, the Indonesian island of Batam is slowly developing into a desirable property market. The 12-hectare waterfront Montigo Resorts, on the northeast coast, offers 133 villas (45 private villas and 88 terraced and semi-detached homes), starting from US$305,000. The development is also within easy reach of six championship golf courses and two marinas. Its first phase should be concluded by the end of 2010.

Restrictions: Would-be buyers have to learn to carefully navigate property regulations. Foreigners are still not allowed to own land freehold, but generally have three options to secure a property: either buy leasehold on a 25-year basis that is renewable; buy through an Indonesian Nominee Power of Attorney Agreement – a legal agreement where an Indonesian nominee is the registered owner; or purchase via a rights-of-use title valid for 25 years, with the possibility to extend it for another 25.

AUSTRALIA

GOLD COAST

For prospective purchasers who aspired to buy into the Australian coastal lifestyle but couldn’t quite afford it, now may be the time to do so, says Tim Lawless, national research director at rpdata.com, Australia’s leading provider of property data records. Housing values across some of Australia’s most popular coastal regions have shown significant falls, but the market appears to have bottomed out over the last 12 months. Prices are lower than they were a year ago and monthly sales volumes remain well below the 10 year average.

Lawless noted that on the Gold Coast, arguably Australia’s most iconic lifestyle market, median house prices are still 7.7% lower than last year. A three-bedroom house near Mermaid Beach can cost about US$640,000, while the median price in the last 12 months in Surfers Paradise was around US$1.1 million, and the median prices for a house in Paradise Point was US$760,000.

Restrictions: Australia’s Foreign Investment Review Board introduced changes to rules governing foreign buyers in 2009, including a rule that all apartments in new projects can now be sold to overseas buyers for their own use. Another change allows student visa holders who live in Australia to now spend more than the previous cap of A$300,000 (US$269,000) on a property.

VIETNAM

Vietnam’s property market enjoyed a boom between 2006 and 2008, with prices rising in some cases by as much as 50% in the mid- to high-end residential sector in Ho Chi Minh City, but it has since fallen back to the levels of 2007.

The luxury beach property market started three years ago when The Nam Hai, an upscale resort in Hoi An was developed. The resort offered 40 pool villas priced between US$1 million for a large one-bedroom villa to about US$2 million for a three-bedroom one. But this sector of the market still remains very small. Several new developments are underway in Danang, including the Hyatt Regency Danang Residences and the Estates at Montgomerie Links. The Hyatt Regency project, due to be completed in 2011, will have 202 villas and condominium units, with a starting prices of US$180,000 for a 75-sq m one-bedroom flat, while villas are priced at US$1.2 to 1.7 million. “These are very realistically priced and compare very favourable against property in Phuket and Bali. Buyers in Vietnam are willing to spend money for a premium product – as long as the developer is delivering quality,” notes Mark Powell, Hanoi branch director at Savills Vietnam.

Banyan Tree is currently developing a major multi-hotel project at Laguna Hue, an hour’s drive from Hue and Danang, which will include some branded resort residences. The development is anticipated to open by 2012.

Restrictions: Foreign organisations and individuals working in Vietnam are allowed to buy one residential apartment freehold. Prospective buyers who do not live here are limited to a 70-year leasehold on condos, with an option to renew for another 70 years. Foreigners can also lease land for 50 years to build a home, but they have no title rights.