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FEATURES

MYANMAR ON THE MOVE

whATâ&#x20AC;&#x2122;s in sToRe in This unTesTed mARkeT

DUBAI BOUNCES BACK

emiRATi mARkeT TuRns The coRneR

VACATION MODE

Splendida Italia Great deals await in the Bel Paese

The ART of invesTing in A holidAy pRopeRTy

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Banyan Tree Private Collectionâ&#x20AC;&#x2122;s Casa Lucardo in Florence, Tuscany

COUNTRY GUIDES

BEST SINGAPORE PENTHOUSES 11/29/12 8:57 PM

THE HEIGH T OF LUXU RY @GURN E Y

S P Setia Bhd Setia Pearl Island Country Club No. 8 Persiaran Kelicap 11900 Bayan Lepas, Penang, Malaysia F +604 641 2255

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Call +604 641 2255

spi-sales@spsetia.com.my | www.setiavresidences.com.my

MALAYSIA | VIETNAM | AUSTRALIA | SINGAPORE | CHINA

11/29/12 11:44 AM

SETIA V RESIDENCES is another prestigious project by Malaysian property developer S P SETIA, an international awardwinning public listed company and market leader, with a sterling reputation for integrity, quality and innovation. Its portfolio encompasses townships, eco sanctuaries, luxury enclaves, high-rise residences and commercial developments. Its growing international presence includes interests in Vietnam, Australia and Singapore. Strategically located along Penangâ&#x20AC;&#x2122;s famed Gurney Drive, SETIA V RESIDENCES is the most highly sought-after location by the affluent. This meticulously crafted, FREEHOLD luxury property has everything tailored for a perfect lifestyle; impeccable amenities, top-notch security system, and a well-planned architecture that maximises panoramic views of the sea and the city. A true icon set to grace Penangâ&#x20AC;&#x2122;s skyline. Make SETIA V RESIDENCES your seafront sanctuary in the sky.

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THE TEAM Managing Director/Publisher ALEXANDER KNIGHT alex@panashcomedia.com Commercial & Finance Officer JAMES HARRISON james@panashcomedia.com Editorial Officer JENNIFER HARRISON editorial@panashcomedia.com

PUBLISHER’S NOTE It is beginning to look like the worst may be over. Property prices appear to be stabilising and markets are slowly Australia rode the storm with a certain deftness and has proven relatively robust, rising nearly 10% overall since 2007, and the Reserve Bank of Australia recently cut interest rates giving the market an immediate shot in the arm, reversing some disappointing performances from the last year. To top it all, Aussie cities dominate the ‘most liveable cities in the world’ top 10 charts for 2012. New Zealand is another market that, despite initial setbacks, has come back strongly – with the average national house price rising by 6% to US$304,000 during the year to September 2012. And Auckland is rated number 10 on the ‘global top places to live’ list. At the same time, South-East Asia is proving especially interesting: we are witnessing a seriously major real-estate boom in Jakarta. The expectation is that more than 150 new skyscrapers (a building that is over 150 metres tall) will be constructed before 2020. Bangkok is another matter. Entry is reasonably straightforward, but there are certain agents that fear that as there is so much under construction presently, that it may well lead to serious oversupply. This is great for property hunters looking for a bargain! bottomed out and is on the rise again, starting to make it one of the most sought after markets in the world – just examine the US Patriot Act carefully before you take the plunge.

Editor-in-Chief RODEL AMBAS, JR. editorial@panashcomedia.com Design and Production ARIF VILLANUEVA ADIL production@panashcomedia.com Digital Manager TREVOR WATLING trevor@panashcomedia.com Sales Executives MELISSA CERINA BENSON LAI advertising@panashcomedia.com Circulation and Distribution LETTY ADVIENTO circulation@panashcomedia.com

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Panashco Media Pte Ltd is registered in Singapore 201127591R. Copyright © Panashco Media Pte Ltd 2012. 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.

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Contents DECEMBER 2012–JANUARY 2013

TURNING A NEW LEAF

There’s plenty of opportunity waiting in Dubai’s new boom.

BOOM TOWN Dubai’s market gears towards recovery.

FEATURES

INSIDE ITALY

AFRICAN ABODES

INVESTING IN AMERICA TODAY

BUSINESS IN THE FRONTIER

Despite the debt crisis, Italy is still considered a strong, established core market.

The remarkable performance of its housing sector gears Kenya to safe haven status.

The American government, more than ever, welcomes

Myanmar’s warming up after decades of military isolation. What’s in store for investors?

E R R A T U M In our ‘Safe Haven’ feature published in our second issue, we mentioned the Singapore government’s ‘Seller’s Stamp Duty (SSD) imposed on 30 August 2010. This has been superseded by a new set of SSD rates imposed on 13 January 2011, which will apply for properties acquired (or purchased) on or after 14 January 2011 and disposed of (or sold) within 4 years of acquisition.

The latest SSD works as thus: Holding period of 1 year = 16% of price or market value, whichever is higher Holding period of 2 years = 12% of price or market value, whichever is higher Holding period of 3 years = 8% of price or market value, whichever is higher Holding period of 4 years = 4% of price or market value, whichever is higher

Visit the Inland Revenue Authority of Singapore website for more information www.iras.gov.sg/irasHome/page04.aspx?id=10212)

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Contents DECEMBER 2012–JANUARY 2013

FEATURES

12 AT HOME WHILE ABROAD Make your favourite holiday destination your real home away from home.

INSTITUTE OF 36 ROYAL CHARTERED SURVEYORS

44 BALANCING ACT 47 HIGH LIVING

Singapore’s trying to keep houses affordable for locals, but at what cost?

Take a peek at some of Singapore’s best penthouse apartments.

50 50 DESIGN FUSION

Modern design and architecture calls for versatility and a global perspective. And Singapore’s leading the way.

INVESTMENT & 70 52 SMART INTERNATIONAL PROPERTY EXPO IN 58 OPPORTUNITY AUSTRALIA’S GOLDEN COAST The housing slump may soon be over in Australia’s tourist capital.

70 ASSET DIVERSIFICATION

Mitigate risk by going diverse. In investing, that is.

REGULARS

72 ON THE COVER

8 60 72

NEWS COUNTRY GUIDES PROPERTY INVESTMENT

¦ Splendida Italia

Nestled in the rolling hills of Montespertoli in Florence, Italy, is Banyan Tree Private Collection’s Casa Lucardo. This 300-year-old, southfacing villa is surrounded by a private olive grove and offers panoramic views Tuscany is famous for.

A member of Banyan Tree’s impressive portfolio of properties, investors can avail themselves of a basic membership plan for US$150,000 (joining fee) and

US$3,150 (annual due) that includes 1-week use of a two-bedroom villa, vacation planning services, and golf access, among others.

visit www.btprivatecollection.com for more details.

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Wish you lived here? Find your holiday home/investment on the beach.

Thailand Australia New Zealand Indonesia Malaysia USA Spain

(Estate Agent License No. L3010404H), Penthouse Level & Level 42 Suntec Tower Three, Temasek Boulevard, Singapore 038988

www.apss.com.sg

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NEWS D ECEMBER 2012 — J ANU AR Y 2 0 1 3

High life

Princess Tower Dubai, UAE 2012 414 metres

With the global property market starting (albeit slowly) to pick up and construction gathering pace, developers are unveiling lofty digs around the globe. In fact, six of the world’s 11 highest residential towers were either opened or topped up over the last 18 months. It seems that people couldn’t get enough of the high life. The percentage of supertall residential buildings has increased from 34% in 2009 to 45% in 2010, while office buildings has fallen from 42% to just 20% over the same period. Only four of the ten tallest buildings 28 of the 50 tallest buildings in the world are used primarily as offices.

2 23 Marina Dubai, UAE 2012 392.75 metres

Who’s buying where? One of the key trends influencing the global prime development market has been the growing dominance of cross-border transactions. In Singapore, for example, the proportion of prime newbuild stock being purchased by foreign nationals is 25%. In Hong Kong it is around 50% and in London it is between 50% and 70%. The much lower proportion in New York City (15%) could be explained by the ability of resident cooperative groups to block some applications.

Here’s a look at the world’s prime development markets, and who’s buying there.

London

Hongkongers Singaporeans Middle Easterners Chinese Indians

Geneva Swiss British Russians Germans French

Perth/Melbourne Chinese Singaporeans Indonesians Malaysians

3 Elite Residence Dubai, UAE 2012 381 metres

4 The Torch Dubai, UAE 2011 381 metres

5 Q1 Gold Coast, Australia 2005 322.5 metres

New York

Paris

Singapore

Hong Kong

Chinese British Russians Brazilians French

Russians Brazilians Middle Easterners Chinese French

Indonesians Chinese Malaysians Indians British

Thailand Hongkongers Singaporeans Indians

Vietnam Russians Chinese

Chinese Americans Australians British Indians

Barbados British Canadians Americans

Kenya British Italians Germans

SOURCE KNIGHT FRANK RESIDENTIAL RESEARCH

Demand drivers Competitive nature Major factors that drive global purchases of residential properties Rank

Category

Very important in…

Lifestyle

European sun and snow belt, Paris

Investment Singapore, Mumbai

Security

London, New York

Business

New York, Sydney

Tax

Monaco, Switzerland

Education

London, Melbourne

SOURCE KNIGHT FRANK RESIDENTIAL RESEARCH

Switzerland tops this year’s list of most economically competitive economies based on the World Economic Forum’s (WEC) Global Competitiveness Report 2012– 2013. Not to be outdone is second-rank Singapore, one of only three Asian economies to make the top ten. According to WEC, the report assesses the competitiveness landscape of 144 economies, providing insight into the drives of their productivity and prosperity. It added that productivity improvements and private sector investment will be key to improving global economies at a time of heightened uncertainty about the global economic outlook.

1 Switzerland 2 Singapore 3 Finland 4 Sweden 5 The Netherlands 6 Germany 7 USA 8 UK 9 Hong Kong 10 Japan

SOURCE GLOBAL COMPETITIVENESS REPORT 2012–2013

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6 HHHR Tower Dubai, UAE 2009 317 metres

Ocean Heights Dubai, UAE 2010 310 metres

Gramercy Residences Manila, Philippines 2012 302 metres

City of Capitals Moscow Tower Moscow, Russia 2010 301.59 metres

We’ve the Zenith Tower A Busan, South Korea 2011 301 metres

Mercado madness What economic downturn? It seems that the developing world couldn’t get enough shopping, at least according to Jones Lang LaSalle’s Retail Real Estate Momentum Index. The US-based estate agent ranked 56 countries and identified those with the strongest momentum in terms of consumer, retailer, developer and investor activities. Scores were based on growth projections (to the end of the decade) of total population, urban population, GDP, GDP per capita, retail sales and shopping centre stock, combined with momentum indicators covering real estate investment activity and international retailer presence.

And the top 20 countries are… 1 China

11 Malaysia

2 India

12 Chile

3 Indonesia

13 Ukraine

4 Turkey

14 Morocco

5 Brazil

15 Saudi Arabia

6 Vietnam

16 Egypt

7 Peru

17 Poland

8 Thailand

18 Mexico

9 Russia

19 Philippines

10 Kazakhstan

20 Colombia

SOURCE JONES LANG LASALLE

11 Eureka Tower Melbourne, Australia 2006 297.28 metres

vacancy rate by the end of 2012, according to Jones Lang LaSalle, the lowest since 1991.

US$193,653 Australians’ median wealth per adult – the highest in the world according to Credit Suisse.

So you want an iPhone? It’s that true that saving for an iPhone 4S – one of the most sought-after products in recent years – can take patience. But the amount of patience depends on where you work.* According to UBS CIO Wealth Management Research, people working in Zurich can afford the smartphone the quickest (i.e. after 22 hours of work). Those in Mexico City and Bucharest need to work ten times longer. And Asia? The purchase would on average require considerably more than three weeks’ salary (assuming a 45-hour working week).

Bangkok - 165 hours

Manila - 435 hours

Beijing - 184 hours

Mumbai - 338 hours

Delhi - 369 hours

Seoul - 56 hours

Dubai - 46.5 hours

Shanghai - 142 hours

Hong Kong - 53 hours

Taipei - 79 hours

Jakarta - 348.5 hours

Tokyo - 35 hours

Kuala Lumpur - 129 hours *Price of the product divided by the weighted net hourly wage in 15 professions. iPhone 4S 16 GB was considered. SOURCE UBS CIO WEALTH MANAGEMENT RESEARCH

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NEWS D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Where it’s best to live

ustralia and Canada may have experienced their worst Olympic performances in recent years, but their cities have something else to boast. Seven of the top ten cities in the Economist Intelligence Unit’s (EIU) 2012 Global Liveability Survey are either Australian or Canadian. Starting as a means of testing whether human resource departments needed to assign hardship allowance as part of expatriate relocation packages, the EIU’s annual ranking has evolved as a broad means of benchmarking cities. (And in some cases it is used by cities to promote themselves.) The concept of liveability, says EIU, is simple: it assesses which locations around the world provide the best or the worst living conditions. The survey scores 140 cities from 0 to 100 on 30 factors across five areas: stability, health care, culture and environment, education and infrastructure. These numbers are then weighted and combined to produce an overall figure. Cities that rank highly are mid-sized conurbations in countries with low population densities, conditions that are likely to result in low crime levels, functioning infrastructure and easily available recreational activities.

Here’s this year’s top ten.

1 Melbourne, Australia 2 Vienna, Austria 3 Vancouver, Canada 4 Toronto, Canada 5 Calgary, Canada (tied) Adelaide, Australia (tied) 7 Sydney, Australia 8 Helsinki, Finland 9 Perth, Australia 10 Auckland, New Zealand

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World’s winning cities Despite the current volatile global market, the world’s major cities have posted impressive property investment volumes in the 12 months to the second quarter of 2012, with New York City leading the pack for the second year running. The Big Apple’s investment volumes rose 18.9% to US$34.7 billion in the said period, 18% above its nearest rival London. Paris

$19.4 billion

London Metro New York Metro

$34.7 billion The Big Apple also retained its position as the top destination for multi-family residential property investment.

Hong Kong

$16.8 billion The southern Chinese territory retained the top spot for retail sector investment boosted by the substantial US$2.4 billion sale of Festival Walk, an upscale Kowloon mall. Hong Kong also leads the Asia–Pacific region in hotel investment.

$29.3 billion

Tokyo

The UK capital is the world’s largest office and hotel investment market, the latter no doubt boosted by the 2012 Summer Games. It is also the world’s largest market for cross-border investors.

$23.9 billion

San Francisco Metro

Washington DC Metro

$15.4 billion

$13.8 billion

Boosted by technologydriven growth, San Francisco is the world’s second largest market for industrial investment, fifth for multi-family residential property investment and third for hotel investment. The Bay Area is also the world’s second leading city in terms of innovation.

Although the DC area is hampered by an uncertain outlook for government jobs in light of deficit-reduction plans, it remains the world’s second largest market for multi-family residential property investment.

The Japanese capital is Asia–Pacific’s most active city in terms of industrial investment, displacing Singapore.

The French capital is the second largest market for crossborder investors, third for offices and eight for retail and hotels. It is also Europe’s leading city in terms of innovation.

Chicago

$10.7 billion After New York, Chicago is the USA’s most connected city, an important factor in generating and sustaining business and leisure opportunities. It is also the world’s sixth largest market for retail and fifth in industrial property investments.

Los Angeles Metro

$16.9 billion The USA’s second largest city outpaced New York in terms of retail investment, posting transaction volumes of $3.9 billion. The city is also the world’s largest industrial investment market.

Toronto

$8.03 billion The lone Canadian city to make the top ten, Toronto helped boost North American cities’ dominance in 2012. The US$1.2 billion sale of Toronto’s Scotia Plaza confirmed investors’ preference for well-located, multitenanted office space.

SOURCE WINNING IN GROWTH CITIES 2012 (CUSHMAN & WAKEFIELD) PHOTO CREDIT ©SXC.HU New York/ZEATHIEL, London/GANXTA, Tokyo/SHINYAA, Paris/PINZINO Los Angeles/ FELLIPESSA, Hong Kong/ATHEWMA, San Francisco/BEVERLYLR, Washington/RENDO79, Chicago/WWILSON, Toronto/LIZARD976

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

At home while abroad The art of investing in a holiday property. By JS Lee

f you frequently travel to other countries or even to places within your own country, then it is worthwhile purchasing a holiday home as a base of residence during your holidays. Why pay for a hotel or rent a villa (which means paying off someone else’s mortgage) when there’s a vacation home waiting for you elsewhere? PHOTO COURTESY OF KOP PROPERTIES

RELAXATION AND RENTAL RETURN Your vacation home can generate you rental income when you are not using it. One example is KOP Properties’ Montigo Resorts Nongsa in Batam, Indonesia.

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Holiday homes can be villas on a beach or on a golf course, or an apartment in the heart of an exciting, cosmopolitan city. It can even be a house near a holiday resort or friends and family you visit often. In addition to the exclusivity of owning your own holiday property, not to mention the convenience and the envy of your friends, there is also good reason to invest for the sake of rental returns. In many cases, the management of renting out your holiday property is included in the sale price, or is often on offer as a service. Although itâ&#x20AC;&#x2122;s not necessarily as easy as purchasing a home in a desirable location and then just sitting back and waiting for the rental income to roll in, as there must be some consideration for the cost of upkeep and the times of year when there will be no rental income at all, holiday homes often offer built-in features that make using it for your own holidays, or renting out for anotherâ&#x20AC;&#x2122;s holidays, easier than expected.

Â&#x2019; Golf resorts offer more than just

golf, which means that even nongolfers will be happy to holiday on a golf resort. The resorts themselves are usually clever enough to offer â&#x20AC;&#x2DC;Golf Widowâ&#x20AC;&#x2122; packages to the spouse of the golf player, which typically include spa packages and tours to local attractions. Even children are covered with childrenâ&#x20AC;&#x2122;s playgroups and even golf lessons on offer.

Â&#x2019; With regards to safety, the security

provided by golf resort properties is second to none. Often surrounded by security gates or walls, and with security personnel patrolling the area 24/7, golf resorts offer the safest, most secure location to take a family on holiday. Â&#x2019; Golf holidays are extremely

popular in Europe (especially Britain, Spain and Portugal) and the USA (California, Arizona, and Florida) and with new global destinations cropping up, such as in South Africa. Â&#x2019; Golf is one of the most popular

AT THE GREENS With golf gaining popularity among Asians, many new courses are popping up in Singapore, Malaysia, Indonesia and the Philippines.

pastimes in the world, with over 25 million players in the USA alone. Â&#x2019; Itâ&#x20AC;&#x2122;s worth noting that the Chinese,

who are already into golf, are increasingly taking notice of the

HOW TO START

2 3

you or others are likely to want to visit and spend time in. Choose a destination with a long rental season. Consider infrastructure and make sure your selection is reasonably close to an airport. If you intend to let your holiday home, then be sure to select a property that is attractive enough to stand out on an internet portal. If you are not going to spend much time in the unit yourself, then it is essential to hire a management company, especially when your holiday home is far from your primary residence.

ÂŠ SXC.HU / VIVEKCHUGH

1 First select an optimal location where

GOLF HOLIDAYS

The safety of investing in a golf resort property encompasses more than just security: Â&#x2019; Many golf resorts that sell properties offer the management of rentals and property upkeep into their services.

ÂŠ SXC.HU / KURTANNO

One of the most attractive holiday destinations are golf resorts. They offer very attractive rental returns and represent one of the safest investment opportunities available.

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FEATURE D ECEMBER 2012 â&#x20AC;&#x201D; J ANU AR Y 2 0 1 3

sport and booking more golf holidays around the world than ever before. Â&#x2019; Golf is very popular with wealthy

individuals. In other words, individuals who can afford to play golf can also spend a lot of money on accommodation. popularity in Asia, with many new courses and tournaments popping up in Singapore, Malaysia, Indonesia, the Philippines, Thailand, and even Cambodia and Vietnam. Japan, South Korea, Australia and New Zealand are already popular destinations, as are Europe (Britain, Spain and Portugal) and the USA (California, Arizona and Florida). Â&#x2019; The number of golf courses

worldwide is growing. As of 2008, there are more than 17,000 golf courses in the USA, 2,752 in the UK, 2,442 in Japan, and about 2,300 in Canada and 1,500 in Australia. According to a World Golf Organisation estimate, as of 2012, the number of golf courses has nearly doubled outside of the USA, especially in Asia. Many, if not most, of these courses â&#x20AC;&#x201C; especially newly built ones â&#x20AC;&#x201C; specifically include villas and apartments for sale or let, as well as additional amenities beyond the game of golf.

BEACH HOLIDAYS Perhaps the most popular holiday home investment destination is any place nearby a beautiful beach. However, itâ&#x20AC;&#x2122;s important to remember the best rules of investment practice when investing in a beach holiday home where you expect to earn a rental income. For example, the price point must be stronger than the location alone. Just because you think the beach is beautiful doesnâ&#x20AC;&#x2122;t mean others will want to spend their holidays there. As always, consider infrastructure: Is it near enough to an airport? Are there shopping and enter-

PHOTO COURTESY OF LAGUNA RESORTS AND HOTELS

Â&#x2019; Golf is gaining significant

tainment venues nearby as well? Beyond the rental income, however, there is an attractive reason to consider holiday homes, especially beach homes. The familiarity of returning to the same place year after year â&#x20AC;&#x201C; especially if you have children â&#x20AC;&#x201C; can often make up for the cost of the investment itself. There is also the possibility of making friends when you return to the same holiday location, and so you can consider BBQ or dinner parties or other social events with your holiday friends. If the location is close enough to your primary residence, then there is also the added benefit of spending more time in your holiday home than not. If it is within driving distance, for example, then frequent, long weekends away are not out of the question. Additionally, you can stock your holiday home with stuff you would normally need to purchase while on holiday, such as food,

beach gear (surfboards, frisbees, shovels, sun cream), plus clothing, towels, bicycles, and even a car if space allows. Another benefit of a beach holiday home near your primary residence is increased rental returns and capital gains. If it is in a location where you want to spend your holidays, then itâ&#x20AC;&#x2122;s likely your neighbours will feel the same way. However, there are some additional factors to consider when purchasing a beach property: The cost of upkeep may be higher due to salty air. Depending on the materials used in constructing the property, the damage caused by salty air and humidity may need to be addressed yearly. Additionally, if you are going to rent out the property, then your visitors may take an extra toll on the property by leaving their wet beach towels and equipment around and by dragging sand into the place.

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PHOTO COURTESY OF TOURISM AUSTRALIA

CITY HOLIDAYS If you’re a person who likes the hustle and bustle of city life, then do not forget about the possibility of purchasing a home or apartment in a major, cosmopolitan city. As investments go, this one is often a fairly safe bet as it appeals not only to holiday-makers but to business travellers as well. In the Asia–Pacific region, some cities where the property investment market is known to be vibrant include, in no particular order, Singapore, Bangkok, Sydney, Melbourne, Brisbane, Auckland, Kuala Lumpur, Jakarta and Manila. While Singapore and Australia are well-developed countries with cities that have been attracting foreign investment for years, there are other new places to consider in the emerging markets, such as Malaysia and Indonesia. Regardless of which city appeals to

TO BEACH HIS (OR HER) OWN The most popular holiday home destination is any place near a beautiful beach.

you the most, there is no doubt that with the infrastructure already clearly in place, there is less to fear with the investment of a holiday property in an already well-established city. Airports, restaurants, museums and entertainment are at hand, encompassing much of what holiday-makers expect to do during their stay. There is also the added benefit that excursions to nearby local attractions – even beaches and golf courses – will be

available from an inner-city location. As far as tourists are concerned – and therefore your rental potential – when choosing their holiday destination to a country where they have never been, there is a certain amount of security in choosing a major city. Regardless of where they stay in that city, there will be something to do and fun to be had; if choosing a holiday resort, on the other hand, and the resort falls short of their expectations, they may very well be stuck. And, as mentioned, there is the rental appeal beyond just holiday-makers. Business travellers who frequent the same city are increasingly looking for alternative accommodation packages beyond hotels. Business travellers, not unlike holiday-makers, are specifically looking for the ability to make themselves more ‘at home’.

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Find your ideal golf property ARGENTINA · MALAYSIA · JAPAN · AUSTRALIA · NEW ZEALAND · PORTUGAL · SOUTH AFRICA · FLORIDA, USA

(Estate Agent License No. L3010404H), Penthouse Level & Level 42 Suntec Tower Three, Temasek Boulevard, Singapore 038988 www.apss.com.sg

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Inside Italy

FEATURE

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The Bel Paese’s housing market remains attractive despite the debt crisis. By Rodel Ambas Jr.

ne cannot be blamed for being wary of Italy these days. The country was hit hard by the 2008–2011 crisis, which caused its economy to shrink 6.76%. According to Eurostat, the EU’s official statistics body, Italian public debt stood at 120.9% of its GDP in 2011, EU’s second highest after the beleaguered Greece. Italy’s debt problem is compounded by an economic slowdown. So does this mean that there’s nothing promising for foreign property buyers in Italy? Apparently not. According to Knight Frank, despite the debt crisis, Italy is still considered a strong, established, core property market. However, the London-based estate agent also cautioned that the country’s property values are unlikely to recover over the next few years.

‘Italy is a myriad of destinations, each with their own unique charm and characters,’ says Rupert Fawcett, head of Knight Frank’s Italian Desk. ‘Buyers are predominantly driven by their desired lifestyle – they seek the long-term enjoyment of a second home rather than a short-term investment opportunity.’ And Italy has plenty to offer in this department. From the tranquil views of the Alpine lakes in Lombardy and picturesque coasts of Amalfi, to the rolling hills of sunny Tuscany and architectural gem that is Rome, Italy is a place replete with

LAKESIDE LIVING Italy’s picturesque Lake Como in the Lombardy Region has been popular since the Roman times. © SXC.HU / CRICO

historic and impressive outstanding areas that yell investment opportunities (albeit of the long-term type). It’s no wonder that more than 46 million tourists visited Italy in 2011, according to the World Tourism Organisation.

TOURIST MAGNET As of 2011, Italy has 47 sites in the UNESCO World Heritage list – more than any country on earth. Its great cities of art – Rome, Venice and Florence – have been attracting visitors for centuries. Rome has the ruins and the religion; Venice has the Grand Canal and the engineering marvel; and Florence has a Renaissance masterpiece at every corner. But there’s more to Italy than ruins, canals and frescoes. Milan, in the northern Lombardy region, is considered the world’s premier fashion capital. Along with the greater Lombardy Region where

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it is a part of, it is the engine that runs Italy’s economy, with a per capita GDP about 25% higher than the country’s average. A bit down south is Emilia-Romagna, a region that best exemplifies Italy’s gastronomic tradition and love for sleek cars. The region is home to Ferrari, Lamborghini, Maserati, De Tomaso and Ducati, and also the centre of Italy’s culinary tradition (think Parmigiano Reggiano, pancetta and prosciutto di Parma). Fabulous beaches are also scattered across the southern part of the peninsula and its two largest islands. The Amalfi Coast in the Campania Region is home to the picturesque Positano, which was featured in the 1994 film Only You. Also in this region is Capri, a resort island since the Roman Republic and a favourite hideaway among Hollywood A-listers (pop singer Mariah Carey reportedly owns a villa on the island). For those who prefer snow over sand, the Dolomites in the Southern Alps is the mecca for adrenaline junkies. Declared a natural heritage site by UNESCO, Dolomites is famous for skiing in the winter months and mountain climbing, hiking, base jumping and paragliding in the summer and late spring/early autumn. In the first week of July every year, the

Maratona dles Dolomites, an annual single-day road bicycle race covering the seven mountain passes of the Dolomites, is staged. Another important cultural and economic city in northern Italy is Turin, capital of the Piedmont Region. Wellknown as the home of the Shroud of Turin, it hosted the 2006 Winter Olympics and serves as the headquarters of automobile manufacturers FIAT, Lancia and Alfa Romeo. It also has the distinction as the first capital of the unified Italy. Indeed, the classical poetic appellative Bel Paese (beautiful country) fits Italy perfectly, as the country is one of the single greatest repositories of sensorial pleasures on earth. From art to food, from stunning and varied countryside to chic fashion, Italy has it all. The country is also about lapping up the lifestyle. It’s about idling over a coffee at a streetside café or lingering over a long lunch in the hot Mediterranean sun.

BEST PLACES Although the Bel Paese is experiencing one of its most trying times, economically speaking, Italians continue to believe in property investment, which they perceive as more robust than the volatile stock market. Foreign buyers, too, keep their faith with Italy, but they are more prudent, selective and conservative. Many buyers perceive that the market that offers a promising return is the more than €350,000 (US$453,388) range, says Linda Travella of Casa Travella, but only as long as they feel confident in the quality of their investment. According to a report by Country Life, two areas that have remained resilient are Tuscany and the Alpine Lakes. Jelena Cvjetkovic of Savills says that the drop of transactions was moderate in the main coastal and mountain areas, confirming the passion for holidays in Italy and quality of lifestyle.

Tuscany

GARDEN VARIETY Lago Maggiore’s Isola Bella is today a popular tourist destination and a good example of an Italianate garden. © SXC.HU / WILLEMT

The region has been a huge favourite of foreign buyers since the 1960s; however, many believe that property prices in Tuscany are outside their reach. According to Travella, buyers will be surprised to find there are properties to suit all budgets. Just 20 kilometres from the walled city

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A buyer’s guide to Italy Can I really buy a property in Italy? This is perhaps the most common question property buyers have before making their very spending a huge amount of money for a house in a strange land can be daunting. But achieving the dream of living overseas takes a vision and small steps that take you closer and closer to living that dream.’ to take time to consider your intentions. For home and the perfect location? Research thoroughly. After you’ve determined your

mation and gathered data from a variety of about accurately setting an objective. Considering the following questions will also help:

1 Where is the property located? 2 What the property’s type (house,

of Lucca, for example, is a detached two-bedroom property for €200,000 (US$259,092). The house is in a small village just 3 kilometres from Borgo a Mozzano, where there is a train service to Lucca/Pisa. Meanwhile, for more affordable prices and solid long-term values, Italian Property Sales & Restorations suggest looking further south, around Cortona, where homes cost €80-460 (US$103-596) per square foot. Always popular among Italians, Cortona has achieved international fame thanks to events such as the Festival del Sole. For the more adventurous types, the region is littered with ramshackle Tuscan farmhouses and rundown villas (and even villages) begging for a loving makeover. And this is what American Michael Cioffi exactly did. A lawyer from Cincinnati, Ohio, Cioffi first went to Castiglioncello del Trinoro eight years ago back in the days when the village was in ruins.

apartment, bungalow)?

3 How big does it need to be? 4 Do you want an old house or

something new? If old, are you then willing to manage a serious renovation?

5 How far is the place from shops/ restaurants?

6 How far from the airport? 7 Are there adequate medical facilities in the area?

8 Is the place near schools, areas of ROOFS WITH A VIEW The cities of Pozzuoli and L’Aquila in the Campania and

entertainment, etc.?

9 Will you need to use public transport?

10 When is all this going to happen?

After careful renovation the estate now comprises four rental villas, an eightbedroom boutique hotel, artist residences and studios. There is also an art gallery, a 14th-century Roman church, a swimming pool, an archaeological garden, a bar and a restaurant. But there are simpler ways of doing a Tuscan renovation. Individual wrecks in gorgeous spots can be found for less than €50,000 (US$65,000). What’s more, prices in Italy are more and more flexible, with the euro still in trouble. Once you have bought your house, the cost of refurbishment is then up to you, but you can make life easier for yourself.

cash do you have available for the deposit

type of property you’ll be able to afford.

(Comune). The local surveyor (Geometra) and the Public Notary (Notaio) undertake these searches reveal any problems regardcompleted. The local Notaio also deter-

or burdens.

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in mind that a mortgage in a foreign currency can be something of a

currency moves against you.

Financing your purchase

procedure for obtaining a mortgage from an Italian lender can be lengthy

are normally based on 30% of monthly income and projected rental income

birthday. It may even be that they’ll make it on the 65th birthday. sign and exchange the contract (Compromesso). This is a binding legal agreement to complete the purchase the fact that this is an unequivocal commitment to buy the property and pay the agreed price at the time of the documentation and search reports

agreed on a timetable to sort them requires all contracts relating to land both parties.

Notaries have a special duty of registration and payment of all Italian taxes relating to the completion. So after a very thorough research on

visited countries.

at around 10 or 15 years. It’s quite

Alpine lakes Another region that offers good prospects is Lake Como in the Lombardy Region. This picturesque area has been popular with the British since the days of Queen Victoria and has long been a weekend getaway for rich Milanese. The area is also ideal for skiers, as it is close to Madesimo and Aprica. According to Linda Travella, a house to restore can be found for only €95,000 (US$123,068) and a two-bedroom apartment for €150,000 (US$194,319). The area is also close to Milan’s airports of Linate and Bergamo. Those looking for properties with views of Lake Como, estate agent Knight Frank lists a 105-square-metre, €530,000 (US$686,593), first-floor apartment located in Torno Village within an old country house. This apartment comprises two bedrooms with en-suite bathrooms, a

HISTORIC CENTRES Florence (above) and most important cities.

large sitting room and kitchen. The property also boasts a private garden, situated next to a stone grotto of 16 square metres with vaulted ceiling and lake views. Recently, high-profile buyers like George Clooney, who famously paid about US$10 million for a villa in 2002, created an international interest in Lake Como, drawing Russians, Germans, Britons and Americans from every affluent walk of life. They appreciate the areas graceful waterside villas, the azure views against the snow-capped Alps and the lake’s long tourist season. There’s always more demand than accommodation available in Lake Como, says Italian

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Buying cost many Italian properties are freehold. The total fees for buying a property are approximately 10–20% of the purchase 1 Registration fee 2 Land Registry fees/stamp duty 3 Notary fees

(generally about 4% of the declared price)

4 Legal fees (for independent legal advice) 5 Estate agent’s fee (usually shared 6 Mortgage fee (if applicable) 7 IVA if buying from a company, which is Italy’s equivalent of VAT. State tax, if buying from a private individual

COSTA ITALIANO The comune of Positano in the Campania Region is one of Italy’s most photographed sights.

Property Sales and Restorations, which ensures that properties here retain their value over time and they also have excellent rental prospects.

Rome The Colosseum, the Spanish Steps, and the Vatican – few cities on earth rival Rome. Although the city is no longer caput mundi (capital of the world), this epic, bubbling metropolis retained a great deal of its old-world charm, not to mention monuments and architectural heirlooms that stood the test of time. And this appeal extends to house hunters, too, who come here in droves to snatch up one of the city’s handsome apartments. Property in the Italian capital is often turned over at a rapid pace and anyone choosing to stay here will benefit from the city’s passion for food, culture and shopping. There are many World Herit-

age Sites in Rome, as well as property overlooking Vatican State and Centro Storico, yet these unbeatable views come at a high price. One example of a fine Roman property is an apartment located behind Piazza della Scala and a few steps away from Piazza Santa Maria in Trastevere. This 60-square-metre, €525,000 (US$680,116) loft rests on the third floor of a historical building, in a quiet and tiny street called Vicolo della Scala.

Le Marche Bordered by Emilia-Romagna, Tuscany and Umbria, one may be forgiven to think that Le Marche, in Italy’s eastcentral coast, pales in comparison to its more famous neighbours. However, its jaw-dropping coastline and rolling hillsides make it a popular choice for those seeking a quiet retreat away from

the busy hub-bub of Italy’s more famous tourist destinations. An example of a fine piece of real estate in Le Marche is a charming five-bedroom house that occupies a sun-drenched elevated position in the comune of Ripatransone. The house boasts a sweeping view of the Sibillini Mountains, fully irrigated gardens landscaped to include various terraces and dining areas, and a large private saltwater pool.

Abruzzo Also located along Italy’s Adriatic coast, Abruzzo’s real estate market is generating plenty of buzz, according to TheMoveChannel.com. The overseas property portal reported that the region received 24.09% of all enquiries for Italian properties since April 2011. Part of the region’s appeal are its ski resorts, mountains, and long stretches of sandy beaches, all within a few hours’ drive from the capital Rome. Little wonder that properties here are quite tempting. An example of a fine Abruzzo property is a spacious, detached villa located on the famous ‘Trabocchi’ coast in the commune of San Vito Chietino in Chieti Province. This 170-square-metre, three-bedroom, brick- and stone-built house (listed for €500,000 or US$647,730) is nicely restored and boasts stunning view of the Adriatic Sea.

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African

abodes

Kenya’s housing market is fast becoming a safe haven in the East Africa region. By Rodel Ambas Jr.

I © SXC.HU / HEJEANS

KENYAN CONNECTION A hot air balloon over one of Kenya’s game reserves (top). Dusk at Mombasa’s Shanzu Beach (above). A panoramic view of Uhuru Park in the capital Nairobi (below).

n Nairobi’s upscale suburb of Karen, a 14-mansion development is receiving its final touches. Inside this gated community are spacious houses where no luxury is spared – hardwood floors, Venetian finishes, designer furniture and en-suite bathrooms – to make sure that their future occupiers will have all the modern conveniences. These future occupiers are what driving Kenya’s property market booming. Driven by a healthy economic growth and increasing remittances from Kenyans abroad, Kenya’s real estate sector is considered a market to watch out for. In fact, according to The Wealth Report 2012, the country’s capital Nairobi is the world’s best performing prime residential market. House values in the city grew 25% in 2011, overtaking established hotspots such as London, Miami and Hong Kong. According to Ben Woodhams, managing director of Knight Frank Kenya, the findings of the survey surprised even the estate agency’s research department. ‘We had to justify our figures.’

PHOTO COURTESY OF KENYA TOURIST BOARD CHINA

Nairobi is not the only Kenyan location experiencing impressive growth in luxury real estate. Cities and towns along the country’s Indian Ocean coast, such as Mombasa (an important tourism centre and Kenya’s main seaport) and Lamu (a historic island with resort-like atmosphere), also recorded a 20% price growth, according to The World Report. There are a number of factors that make Kenya’s housing market attractive, says Woodhams. ‘One is that the country relative to its neighbours is considered East Africa’s safe haven. People are seeing relatively good returns in Kenya specifically, but [also] in Africa as a whole.’ But Woodhams quickly reiterated that ‘safe haven’ is not necessarily a phrase many people should use to describe the country in the global context. But compared to its neighbours, Kenya is definitely stable. The country’s rapid economic development is attracting domestic and international private equity, with particular growth in remittances flowing from Kenya’s increasingly affluent overseas population. In fact, accord-

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A buyer’s guide to Kenya

PHOTO COURTESY OF KENYA TOURIST BOARD CHINA

If you are looking to buy a property in Kenya, chances are you need to pay a hefty price. According to Knight Frank’s 2011 Prime International Residential Index, which monitors price changes across the world’s top-end property markets, Kenya’s luxury real estate saw the greatest price increase at 25%, outdoing other established markets such as Miami (19.1%), London (12.1%) and New York (3.1%).

ing to a report released by the country’s central bank, Kenyans abroad sent US$891 million back home in 2011, up 39% from 2010. And a lot of this money gets invested in the property market. Kenya is the most developed country in the East Africa region. Its middle class is also growing fast. Tourism, which is the country’s second largest source of foreign exchange revenue, has increased significantly, creating the need for more accommodation facilities. The country’s main tourist attractions are photo safaris through the 19 national parks and game reserves.

SECURITY CONCERNS Although Kenya’s prime real estate is booming, experts say that international investors have somewhat been hesitant to dig into the country’s market, due mainly to security reasons. Lawlessness in Somalia recently spilled over Kenya’s northern border, and kidnappings of tourists in the area prompted several countries to put out travel warnings.

IT’S ALL FUN AND GAME RESERVES Africa is posed to become one of the world’s property hotspots according to Knight Frank.

In addition, construction costs in Kenya are high, which coupled with lack of government-provided infrastructure, means that developers have to incur extra costs ‘These elements that drive up the cost of a home are there to stay, so indeed it makes sense to buy a home now as to buy the same home in a few years it will and capital appreciation,’ advises Hello Properties’ Abbing.

‘People need to have [their property] rights secured and to be sure that there is legal and judicial reforms taking place. And there certainly have been a lot of reforms in many African countries, which then encourage foreign investment.’

RECENT DEVELOPMENTS

Although security has been beefed up, foreign investors remain lukewarm, which is understandable as these investors are keen in getting into countries where their property rights are protected, said James Muratha, regional director at Stanbic Investments. He added that the country’s judicial system also suffers from a bad press. But other agents believe these will only be temporary. According to Gikonyo Gintonga, managing director of CBREKenya, there is generally an increase in transparency in Kenya, which is aimed to attract foreign investments.

To take advantage of Kenya’s upbeat property market, local developers are upping marketing efforts to promote their properties across the country. One example is Hello Properties’ US$54million Mandharini project. Located 7 kilometres from the town of Kilifi and 60 kilometres north of Mombasa, this residential-leisure project boasts 130 villas for sale, boutique hotel, golf course and water sport club. The project’s two-, three- and four-bedroom villas are priced between US$350,000 and US$820,000 and can generate owners about 11% rental returns per year and prospectively strong capital appreciation. According to Hello Properties executive director Friso Abbing, the

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development is a lifestyle destination that offers activities for all members of a family. ‘The villas will be sold and most of them will be entered into the rental pool, which will be managed by an international hotel operator. The operator will ensure top class management and high levels of bookings, leading to strong rental returns for our buyers.’

Another project is the upscale Vipingo Ridge in the Vipingo area in Kenya’s northern coast. Sitting on a 2,500-acre area, the development boasts two 18-hole, David Jones-designed golf course and luxury Mediterraneanstyled homes, each built on a land measuring a quarter acre or more. Foreign developers are also see-

SAIL AWAY Kenya’s Indian Ocean coast. A Hilton property in Nairobi’s central business district (below).

ing Kenya’s investment potential, one of which is Dubai’s Emaar Properties, which is set to open a golf and resort development in the country’s Masai Mara Conservation area. Dubbed ‘Enkeresi Mara’, the project will have to meet the demands for a comprehensive environmental and social impact assessment; for instance whether the quantities of water needed to keep a golf course green might put strain on the area’s water supply.

RENTAL RETURNS Building rental houses, too, is becoming an attractive investment option in Kenya. In Nairobi, rents surged 6.6% in the first half of 2012 – the fastest in three years – according to a report recently released by HassConsult. According to its project development manager Farhana Hassanali-Hashmani, the increase in rents is attributed to diminishing supply of new homes in Nairobi, which in turn was caused by a rise in interest rates. Commercial banks raised interest rates from 15% on average to 25% in September of 2011, which drastically slowed down activity in the construction sector. ‘We now foresee continuing rises in rents which may take years to return to stability,’ said Hassanali-Hashmani. In HassConsult’s Housing Property Index for the first half of 2012, the increase in rents over the nine-month period to June of 2012 was 10 times the average increase in the two years to September 2011. This surge marks a reversal from what was seen over the last few years where rental growth was slower than the increase in house prices. According to the survey, rents would build the momentum as fresh supply remains low because of high borrowing costs. According to the survey, which covers all residential property types including apartments, townhouses and villas, an average home in Nairobi’s upper middle income and top-end segment is let for US$1,119 (KES102,044). House prices meanwhile remain nearly flat since June of 2011, rising by a mere 0.9%, as high interest rate keeps prospective buyers bucking away. Experts involved in the survey expect that home prices to remain resilient even with the sluggish demand but property values are likely to

PHOTOS COURTESY OF KENYA TOURIST BOARD CHINA

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rise steadily when interest rates come down to attract new borrowers. Hassanali-Hashmani said the rise in rents may take some time to return to stable level because of the rising demand for accommodation amidst declining supply. Rising rental income is also likely to attract new investments in residential property for letting. Caroline Kariuki, managing director of mortgage brokerage firm TMC, said rising rents will help property buyers who bought homes through mortgage to recover from losses brought about by higher loan repayments. ‘Many landlords have been locked in lower rentals but with rates falling and rents rising, we forecast a return to gains for landlords.’ Another report released by Knight Frank also backs the trends in the top-end segment, reporting that rents rose 5.8% in the quarter to March of 2012. The growth is attributed to an increasing number of expatriate executives working for multinationals that have picked Nairobi as their hub for their East African operations. Renaissance Capital reported earlier this week that the higher interest would see a sudden slowdown in the supply of new homes and office spaces, which experts see as a blessing in disguise. Said Woodhams: ‘High financing costs helped the property prices stabilise, saving the bubble created by speculative forces from bursting.’ Although high interest rates have slowed down construction, stakeholders reckon that the industry as a whole is still growing fast. In fact they argue that Kenyans abroad and foreign investors sourcing financing from outside Kenya stand to benefit given that house prices are not likely to fall due to high demand and inadequate supply. Said Hello Properties’ Abbing: ‘East Africa’s economic development is creating huge opportunities and property prices will keep on rising. Real estate remains one of the most productive sectors of the Kenyan economy promising better returns than agriculture or stock market.’ This view is shared by CBRE-Kenya’s Gintonga: ‘At the moment there is a great interest in Africa as a whole. I think there’s more focus in the real estate and infrastructure. The latter is poised to

The buying process

requisite completion documents, which are In Kenya, locals and foreigners are permitted required to effect the registration of the to buy commercial and residential real property in favour of the purchaser. estate/lands located within a town or 5 Stamping and registration formalities municipality without any restrictions The purchaser is responsible to pay for the provided that they comply with the proper stamp duty on the transfer of property and procedures. Foreigners or privately owned registration charges. Once the valuation has companies whose shareholders are not all been completed, the market value of the Kenyan citizens are not permitted to buy property (not necessarily the value indicated farm lands unless such transaction has been by the transfer) will be indicated on the exempted from the provisions of the Land original transfer of property by the collector Control Act by the president. of duties. Thereafter, the seller’s advocates will need to present the documents to the 1 Identify the land lands office for assessment of the duty The process starts with the buyer payable. identifying a suitable property for purchase. One can seek the assistance Below are the transaction costs that the of a reputable real estate firm. Once the buyer needs to pay for. property has been identified, the buyer is Stamp duty for draft transfer – 4% advised to visit the site to ensure that the Legal fees – 1.5% property meets his or her specifications.

2 Conduct preliminary investigation

Banker’s check charge – KES600 (US$8)

Registration – KES250 (US$3) The buyer or his lawyer should get a copy of the title and the National Identity Card 6 Registration of the seller and conduct the requisite The final process of land purchase is the search at the relevant lands office and registration of the transfer. Once the duly also of the person named in the title as registered transfer has been released to the registered owner at the Registration the purchaser, it is important to verify of Persons Bureau. If the search results registration by conducting a search over the are satisfactory, the buyer should also property. check whether the land is included on the Where the purchaser is being financed, the Report by the Commission of Inquiry on duly registered documents, including the the Illegal and Irregularly Allocated Land. original title for the property, transfer and 3 Negotiate the price and terms and the charge, are forwarded to the financier outline the sale agreement to enable it to settle the balance of the If the buyer is satisfied by the preliminary purchase price. These will be held by the investigation, he or she with the seller bank/financier until the loan has been should discuss and agree on the price and repaid in full. terms of sale. Usually, the buyer is required 7 Seek permission for development to pay 10% deposit and the balance of the If a building will be constructed on purchase price upon completion of the the purchased property, the owner sale transaction. will be required to obtain the requisite 4 Prepare the transfer and obtain the development permissions from the relevant completed documents local authority. Furthermore, if the proposed The transfer is usually prepared by development is likely to have any impact the purchaser’s agents and should be on the environment, the owner is also approved by the seller’s advocate. This required to commission an environmental should also be signed by both parties. impact assessment report and obtaining Unless otherwise stated in the sale an environmental licence from the NEMA agreement between the parties, it is before undertaking any development on usually the seller’s duty to obtain all the the property.

become a big growth factor in Kenya and in Africa as a whole, especially in the oil and energy sector, which offers property equity funds a huge opportunity for them to invest in infrastructure.’ Lloyd Masik of estate agent Lloyd Masika Ltd added that the country’s real estate market is now strong because demand way outstrips the supply. ‘The Kenyan population is increasing by about a million every year. By 2030, 60% of Ken-

yans will be living in towns. So you can see the amount of pressure that would be coming to Kenya’s towns, [which is] obviously translating into a strong property market.’ Meanwhile, Gathoni HamiltonFoster of CFC Stanbic Bank said Kenya is blessed with a demand-driven market, which offers an abundant opportunity for investment. ‘I think in terms of residential investment there is huge opportunity in low-cost housing.’

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What’s in store for house hunters in Dubai after the crash? Plenty, apparently. By Rodel Ambas Jr.

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MAN-MADE MARVEL Emaar Properties’ Dubai Marina when completed will become the world’s largest man-made marina and will house up to 120,000 people. © DUBAI DEPARTMENT OF TOURISM AND COMMERCE MARKETING

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FEATURE

D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Market perforMance A recent report by property management firm Asteco showed that rentals for Dubai apartments and villas have risen in the third quarter of 2012. The report, which was published in Arabian Business, stated that apartment rental costs increased by an average of 2%, while villa rentals averaged 3%. The higher end of the market has performed better, with rental costs of two-bedroom apartments in Sheikh Zayed Road and Downtown Dubai rising by 6% and 4%, respectively, in the same period. Rental costs for a three-bedroom villa on Nakheel’s Palm Jumeirah, meanwhile, were up on average 7%, and the well-heeled The Spring and Arabian Ranches posted an average price increase of 5% and 4%, respectively, for similar properties. The good news follows recent comments from Mike Sefton, property consultant at Knight Knox International, who noted earlier this month that investors are beginning to have more confidence in property in Dubai and in the UAE as a whole. He added that the market is looking more stable and that increasing numbers of investors are choosing the destination for long-term investments.

THRIVING THOROUGHFARE The upscale Sheikh Zayed Road is home to some of Dubai’s most notable skyscrapers, such as the 317-metre HHHR Tower.

Global city Though massive development has left Dubai with a huge amount of debt (from which older brother Abu Dhabi bailed it out), it also gave the emirate a much-needed global exposure. As a result it has become one of the region’s (and the world’s) most recognisable skylines on which the city is heavily banking on to keep itself afloat. During its heyday Dubai emerged as a major business hub in the Middle East, a position which it has gradually regained as its economy made a steady recovery. As of 2012, the city is the 22nd most expensive in the world, according to human resource consulting firm Mercer, surpassing London (25th). The firm also rated Dubai as the best place to live in the Middle East. The cost of living in Dubai is rising rapidly compared with that in other countries, according to the latest global study by UBS. Dubai is now the 22nd

most expensive city in the world – five places higher on UBS’s rankings than it was last year – and still the most expensive city in the Middle East. Despite the fact that apartments in Dubai are now estimated 30% lower than in 2009, the emirate is still an expensive city when the cost of renting is included, at par with Frankfurt and higher than Rome and Chicago. Average monthly rents now stands at around US$2,450 while house prices are about US$3,950 per square metre.

Steady recovery As Dubai’s property market enters a path of steady recovery, when is the right time to invest and more importantly where should you put your money to ensure the strongest returns? With reports coming from the likes of Jones Lang LaSalle, Knight Frank and Dubai Department of Economic Development suggesting apartment prices growing up to 10% a quarter and land sales reporting the highest number of transactions ever, is there still opportunity in Dubai’s real estate market? According to Niall McLoughlin, senior vice-president of DAMAC Properties, there is a host of proper-

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HIGH AMBITION Designed by Chicago-based Skidmore, Owings and Merrill, the 829.8-metre Burj Khalifa has symbolised Dubai’s multibilliondollar building frenzy. The house the Armani Residences, whose 144 units sold for US$3,500 per square foot.

a buyer’s guide to dubai Dubai is again becoming a hot destination for foreign property buyers. According to a report released by Dubai’s Land Department in August of 2012, foreign investors injected almost US$6 billion into half of 2012, with Indians, Pakistanis and British leading the pack. According to Majida Ali Rashid, chairwoman of the Real Estate Investment, ‘the real estate sector performance is moving from strength to strength over the past two years. The market has been attracting more foreign investors, which excellent growth potential.’ In March 2006, the Dubai government passed a law allowing foreign freehold ownership of property in the emirate, but only in areas designated by the ruler. from and to let their properties. It is generally understood that the freehold as set out under this law is a freehold in the international sense, whereby owners are deemed to have absolute rights in their property. Some developers are still selling leasehold rather than freehold titles, in which case the title is valid for the period stipulated in the lease agreement.

Because the international property market in Dubai is still in its infancy, there is as yet no formal purchase process. The only piece of paperwork required is a (usually) straightforward sales agreement. However, a local lawyer or one familiar with Dubai’s real estate laws, since, once signed, the document becomes legally binding. In the majority of cases, those buying freehold property in Dubai do not incur survey fees. Stamp duty does not exist. a 1.5% land registry fee, payable on completion. Because of the absence of a structured purchase process, it is essential to tread warily and deal only with reputable developers and/or agents.

the buying process

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financing your purchase As with any purchase, it’s always better to pay in cash whenever you can. However, some people may not want to part with their hard-earned cash this way, especially for huge purchases such as real estate. Compared to more mature markets, mortgages are not available and the amount of red tape and paperwork involved can be off-putting to those accustomed to the less rigorous system of other countries, especially that of the West. In addition, mortgage lending in Dubai is only four years old and buyer affordability is calculated differently by each lender. A buyer is also advised to use an independent mortgage advisor who can provide guidance through the entire process and will help choose a lender with the best It is also possible (and in most cases preferable) to secure a loan before actually wasted once you have found your dream home.

Below is a step-by-step guide into securing a mortgage in Dubai (for residents and non-residents).

ties coming at a more affordable price for middle management professionals. These include those being built along Al Khail Road, which runs parallel to upscale Sheikh Zayed Road, and in the International Media Production Zone, a 4-million-square-metre freehold development that caters to media production companies. ‘Prices remain attractive and will undoubtedly grow substantially over the medium term as the road networks are improved and shopping, education and health care is added,’ says McLoughlin. In fact, a report released by Bank of America Merrill Lynch dubbed ‘GCC 2020’ predicts that a ‘diversified economy, continued population growth and superior infrastructure investment’ in the UAE will have positive impact on Dubai’s retail, hospitality and real estate market. Being rated as the Middle East’s most confident market also helps. Though over the years it played the

ARTIFICIAL WONDERS The Creek’s signature sail-shaped clubhouse is set dramatically against Dubai’s vertical skyline (top). Nakheel’s Palm Jumeirah (below).

role of a rebellious younger brother to more conservative Abu Dhabi, all the efforts paid off (though the road proved bumpy). According to a recent Nielsen survey, the emirate’s working environment gradually regains strength, which will encourage the return of overseas investment. ‘Dubai’s property market is still in its infancy. As the emirate grows into an international powerhouse, linking trade between the east and the west, valuations and rental returns are only set to increase further as further infrastructural enhancements come on line. There has not been a better time to invest in Dubai in the past four years,’ concluded McLoughlin.

1 Talk to a mortgage broker or a bank to determine the level of borrowing that is available to you. This will help you determine what type of property is within your means. 2 Identify the developments that interest you. Your financial capability and choice of development will narrow down your choice of lender, as they pre-select which developments they will finance. 3 Once you have chosen your lender, collect together the supporting documents required by your particular lender. Document requirements differ depending on whether you are company-employed, self-employed, resident or a non-resident. Generally, the required document include: 6–12 months of bank statements, copy of passport with visa page, proof of current address (utility bill/tenancy agreement), letter from employer confirming income, or a minimum of 2 years audited accounts if self-employed. 4 You are now in a position to select the particular unit in the development of your choice. At this stage, typically a 5–10% holding deposit will be required. Once a sales agreement has been signed both parties, the lender instructs a property valuation by an independent valuer. 5 On approval, the bank draws up a mortgage offer/contract, which is received within 7 days. It is signed and returned to the bank. A transfer date is set, when the Estate Agent, Seller and Buyer attend the transfer of the property title deed at the master developer’s office or the Land Department.

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

How the Patriot Act, the November presidential elections, and the Chinese million-dollar rule affect the US property market. By Jennifer Harrison

lthough known as ‘the land of the free’, American policy following the September 11, 2001 attacks has changed the sentiment of freedom for Americans. But what does it mean to foreign property investors? The Uniting and Strengthening America by Providing Tools Required to Intercept and Obstruct Terrorism Act, also known simply as the Patriot Act, was passed in 2001 by the United States Congress. Its intention, as it specifically relates to foreign direct investment (FDI) in America, is to limit money laundering that might fund terrorist organisations both on American soil and beyond. Section III of the Patriot Act expands the existing authority of the Secretary of the Treasury by requiring extra ‘due diligence’ on the part of any financial institution, which technically covers real estate agencies as well. The due diligence refers

– somewhat vaguely – to stricter rules and regulations to ensure the ownership of any related financial accounts, the legality of any transaction, the monitoring of financial activities, and most notably, holding other financial institutions with which they deal to the same standards. In other words, if opening a bank account in America in order to obtain a mortgage, and money is transferred into that new account from a bank in another country, the American bank has an obligation to override any privacy regulations held by that other institution so that it may perform its due diligence and verify the source of the income. If the foreign financial institution refuses to cooperate, the American bank may refuse the business, possibly even report the activity to the American government as ‘suspicious behaviour’. While this certainly sounds like an infringement of an investor’s right to privacy, the reality is far less worrisome.

The USA is the largest recipient of FDI in the world as well as the largest foreign direct investor. According to a report issued last year by the Congressional Research Service, Foreign Investment, CFIUS, and Homeland Security: An Overview, this two-way exchange impacts the global economy, or ‘the spread of economic activity by firms across national borders’, and means that the American government must take greater care in its foreign investment policies; the report adds, however, that it treats foreign investors ‘no less favorably than U.S. firms’. In fact, it is on the whole true that the American government actually welcomes the influx of investment by foreigners by making it quite easy to invest, and that the Patriot Act has received an undue amount of bad press, mostly from Americans themselves afraid for their own personal liberties. Pre-dating the Patriot Act, and perhaps much more relevant to foreign investors,

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is the Committee on Foreign Investment in the United States (CFIUS). CFIUS is not an independent entity with the freedom to review foreign investment transactions, but operates instead under the authority of the American president and reflects his attitudes and policies. Its task is to assess the implications of national security from foreign investment in the economy.

The US preSidenTial elecTionS

MONUMENTAL SCALE D.C.’s Washington Monument, one of the US capital’s most recognisable stuctures. The Senate Fountain (below) located between the US Capitol and Union Station. Washington D.C. remains the world’s second largest multifamily residential property investment market despite uncertainties brought about by the recent presidential elections.

If the real debate behind FDI in America lies with CFIUS and the direction it receives from the presiding president, then how will the November 2012 elections impact foreign investors? The Bloomberg BusinessWeek recently published an article that says Republican candidate Mitt Romney has a ‘housing policy’ quite similar to Obama’s. Leading up to the elections, little had been said by either candidate about FDI specifically. However, for the first time in 22 years an American president blocked a foreign transaction: in October of 2012, President Obama stopped a Chinese firm from purchasing a wind farm in Oregon stating that it was too close to a Navy base. Realistically, then, a foreigner looking for a home – an apartment or house for investment or spending holidays in the USA – has little to fear from American presidential policy or its relationship to financial institutions. Instead, the November elections hold a much more interesting story: what will happen to the Washington D.C. housing market following the elections?

WaShingTon d.c. aS a foreign inveSTmenT opporTUniTy

Since Obama was re-elected, then the answer is: not much. If a new president had made his way into office, however, the local housing market was set to explode. The incumbent’s staff, not to mention the many lobbyists, journalists, and the more than 200 other elected officials who work on Capitol Hill own a large section of the D.C. real estate market. Any of these who are tied to Obama or the Democratic Party specifically might have found themselves with a ‘For Sale’ sign in their front yard following the election. Then the new presi-

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

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a buyer’s guide to the USa

The American government actually welcomes the influx of investment by foreigners by making it quite easy to invest.

foreign purchase of land or property in security’, there are actually no restrictions on foreign ownership, and the property market system of valuation and inspection standards that make is easy to know the value and quality of what you buy before you buy it. States are listed in a nationwide database For foreigners, paying cash is optimal as

dent’s staff would have moved in, buying up the available real estate. This ebb of property ownership in and around the D.C. area (which may extend as far as the nearby states of Virginia, Maryland and Delaware) makes for a reliable property investment; for as long as there are politics and elections in America, the D.C. housing market remains a resilient and safe investment opportunity.

BEST PERFORMERS

Boosted by technology-driven growth, San Francisco is the world’s second largest market for industrial investment. Miami Beach (left), meanwhile, has seen home buyers in recent months. New York City (right) leads the world in terms of property investment volumes, ©SXC.HU San Francisco / HAPPIDOG Miami / EL_VALDEZ New York / PALE

chineSe bUying US$1 million+ homeS in america Washington D.C. is far from the only sound property investment option in America. The well-known hotspots such as New York, Florida and California are always strong bets – something Chinese investors seem to already understand. The Wall Street Journal says, ‘A new wave of buyers from China is snapping up luxury properties across the U.S., injecting billions of dollars into the country’s residential-real-estate market.

‘Buyers from China and Hong Kong accounted for $9 billion of U.S. home sales in the 12 months ending in March, up 89% from 2010, making them the second-largest group of foreign buyers of homes in the U.S. behind Canadians.’ Although reports are in from all over the USA that Chinese investors are making purchases of extreme luxury homes, including entire floors of Manhattan apartment buildings and mansions in Miami, it is in northern California, around San Francisco and Silicon Valley, that real estate agents are complaining of a lack of homes for sale in the US$1 million range due to Chinese investors. An article published in August 2012 on CNBC by Robert Frank says, ‘Sales of $1 million-plus have more than doubled in many communities in the Valley this year, toppling longtime luxury real-estate leaders like Beverly Hills or Miami.’ Beyond the infusion of Asian cash, the real estate market in America is showing signs of recovery and many journalists, financial advisors and real estate agents have even proclaimed that the housing crisis is over, citing improved purchasing prices in many of the states hardest hit by the housing crisis. This may even be part of why Obama was re-elected. Although it will take time for a full recovery of the housing market, even following the November presidential election, it seems it may not be a buyer’s market for much longer. So invest sooner rather than later so that when it does turn into a seller’s market, you are, as the Americans like to say, ‘sitting pretty’.

– indeed even many districts within each state – will have its own laws regarding the a licensed real estate agent and/or specialty lawyer. Do note as well that it is the seller who pays a commission on the sale of property, not the buyer. By law in most states, the same real estate agent is not allowed to represent both the buyer and seller of a home and many agents even specialise in either buyer or seller brokerage. This is for the protection of both parties. Once an offer is made and accepted by the seller, a binding contract is formed, and a deposit of normally 10% (although as much as 20–30% for foreigners) is placed into a account. The buyer hires a licensed inspector to assess the property more thoroughly and identify any issues or repairs that may be needed. In some cases, the inspector’s for the property, and it is very important that the initial purchase contract include a clause that allows the buyer to pull out of the deal

of the property, and then a title search is performed to ensure the property is free and clear to be sold. Finally, the deal is closed. It is in the closing that the differing state laws come into play the most; however, the closing is in essence the transfer of title and funds, including monies held in escrow, from the sale to the relevant parties. property market, from the housing crisis country, the reality is quite the opposite. The government not only welcomes outside investment, but the laws surrounding the the market itself, while still full of deals from the recent housing crisis, is on the upswing, making it the perfect time to invest.

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Royal Institute of Chartered Surveyors 1300 BC, in the days of Nefertiti and Tutankhamun, royal surveyors were given ornate tombs that feature their biographies in hieroglyphics on the wall. Meanwhile, humble surveyors were busy measuring out Egyptian cornfields using the chain method, which literally involved holding a chain taut and counting the links! Early Chinese and Romans also used surveying principles as did the Vikings. In English history, the master of all of this was William the Conqueror. He was keen to know exactly how much land he had conquered so that he could begin taxing it. In his Domesday Book of 1086, the King’s agents listed every one of England’s 13,418 settlements together with all their property, right down to the last sheep and pig.

16th-ceNtury seeds of A professioN The seeds of an identifiable profession began to germinate in England during the Middle Ages: taking shape in the 16th century as ‘land agency, estate management, building surveying, mapmaking, valuation, estate agency and quantity surveying.’ These tendrils constantly overlapped and flowered under a variety of different names. Inseparable from the early history of land ownership and affluence, this is also the story of how a growing population gradually emerged from poverty and was able to aspire to some of the property that the surveyors were tending – and of the cities that began to burgeon at the same time. During this period, land surveyors were virtually in charge of designing buildings, but were supervised throughout the process by a building surveyor (often the Master Mason). These designers also sometimes worked with ‘measurers’ (medieval clerks of works), whose jobs were to estimate what a building was going to need and cost – the precursors of quantity surveyors.

A history of the surveying profession 1300 BC to AD 1947

Building an Actual Name During its history, the institution had changed its name several times, usually to correspond with an increase in status: 15 June 1868 The Institution of Surveyors 26 August 1881 The Surveyors’ Institution 27 October 1930 The Chartered Surveyors’ Institution (by permission of the Privy Council)

3 July 1947 The Royal Institution of Chartered Surveyors (by personal grant of the King)

SOURCE BUILDING A NAME PRODUCED IN 2010

BY RICS, WRITTEN BY JENNIFER NORTH

Indeed in 1666, when 436 acres of London were incinerated which left 13,200 buildings and 89 churches to rebuild (and 100,000 people homeless), the overworked designers were forced to subcontract their quantifying function to others. This is the job that would become known as ‘quantity surveying’. At the same time, the Guilds were forced to let go of their stranglehold on various trades to attract workmen and, thus, opening up these fields forever. Moving on to the Industrial Revolution, as fortunes began to be made, progress was symbolised by the flour-

ishing of London’s grand construction schemes. The aristocrats developed their grand estates, canals were built and there were many lucrative areas for surveyors to plunge into. This in turn was symbolised by the establishment of several notable surveying firms, including the famous Cluttons in 1765. All of this growth led to the creation of the Institution on 9 November 1868. John Clutton was unanimously elected president and applauded by the 131 members and 19 associates that the institution had managed to attract, and the new institution laid down the following founding ideals: t To secure the advancement and facilitate the acquisition of that knowledge which constitutes the profession of a surveyor, viz. – the art of determining the value of all descriptions of landed and house property, and of the various interests therein; the practice of managing and developing estates; and the science of admeasuring and delineating the physical features of the earth; t To promote the general interests of the profession; and t To maintain and extend its usefulness for the public advantage The new institution was now making itself heard as the voice of individual rights. It often petitioned parliament or gave evidence before royal commissions in defence of the public interest against excessive government infringement – philanthropic work, since no advantage ever accrued to members from such activities. Due in no small part to the institution’s reputation for acting with a sense of public responsibility, its application for a Royal Charter was approved by Her Majesty Queen Victoria, in Counsel, on 26 August 1881.

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Future of the real estate industry 2030 By See Lian Ong, KMN, PPRICS, PPRISM, FRICS, FRISM, ICECA, DIF As told to JS Lee ILLUSTRATION © SALVATORE VUONO

the reNtAl mArket

Today, property is important not only for habitation, industry and commerce; it is also a store of wealth for investors. Beyond this, however, property markets affect nearly all aspects of our lives, especially when considering figures such as (a) construction, which uses approximately 60% of all utilised materials, and (b) heating and servicing these buildings, which accounts for 60% of all energy used. Buildings also employ 10% of our workforce and account for about 40% of our carbon emissions. The impact of property building and maintenance on our lives is indelible.

whAt does the future hold?

ith roughly 70% of the world’s growth wrapped up in real estate, and much of that capital flowing between borders, international asset-valuation standards and professionalism within these standards are paramount.

In the global rental markets, India saw the most dramatic change by going from a down market to an up market, on par with Hong Kong and Germany. China and Brazil are also big winners in terms of growth from Q4 of 2011 to Q1 2012. The USA also saw a market increase in its rental markets during the same period.

2030 is the year of the sustainable development imperative. Beyond culture and demographics – the obvious economic and technological issues – sustainability is the most important factor driving change in the real estate industry. Demographics t The world population will continue to grow along with income disparities. t Rapid urbanisation places the majority of people in cities.

cApitAl flow

Society and culture t A new business culture continues to emerge, in part due to a more universal education system. t The workplace will look more like home.

The flow of investment capital between borders in Q2 of 2012 totalled US$33 billion, with the highest percentage in and out of the USA. The Middle East also invests heavily globally, with special interests in Europe, but no investments into Asia. Asians are also investing into both Europe and the USA.

Economy and finance t The world’s economic structure is restructuring. t The eurozone crisis will continue. t A global corporation will be more powerful than a national corporation.

Technology and innovation t Advances on information and communication technologies (ICT) will have an impact on urban structure. t Through greater connectivity will come an increase in ‘realtime’ management and profound changes will occur in the workplace. t There will be a greater use of ICT for the design, construction, operation and management of properties. Environment t Environmental issues will become mainstream. t A new focus will be placed on shape, density and function of cities. t Waste management considerations will change. t Economic value, along with ‘social worth’, will be redefined. t There will be a new definition of risk management and assessment of disaster-prone areas.

some regioNAl dyNAmics By 2030, there will be a shift of power from China to other regional emerging economies, and the dominance of the USA and Europe will diminish as Asia and Latin America grow in stature. And consider this: as of 2012, only 20% of urban India has already been built.

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FEATURE DEC EM B ER 2 0 1 2 — JA NU A RY 2 0 1 3

Fungibility The latest valuation standards in the global market By David Faulkner and Ben Elder As told to JS Lee ILLUSTRATION © SXC.HU / SVILEN001

eruvian-born economist and writer of The Mystery of Capital, Hernando de Soto, is best known for his work on the importance of business and property rights. Internationally acclaimed and recognised, as well as heralded by governments and leading business publications as the world’s foremost economist, de Soto believes that ‘if standard descriptions of assets were not readily available, anyone who wanted to buy, rent or give credit against an asset, would have to expend enormous resources comparing and evaluating it against other assets – which would also lack standard descriptions.’ The purpose of the Royal Institute of Chartered Surveyors (RICS) is to provide standard framework for the surveying of assets by providing an internationally recognised set of Rules of Conduct for RICS members. With each country providing its own legislation and buyers crossing more and more borders, there is a significant need for quality standards, guidance notes and, indeed, general information. To put into perspective why there is such need for standards in the valuation of assets, consider the world football association, FIFA. Without international standards, there might be the game of football (soccer) but with no tactics or plays, just a mess of everyone playing towards their own, self-defined end. The RICS’ book of rules for asset valu-

ation is supplied to RICS approved and accredited chartered surveyors and asset valuers. Called The Red Book, it has been updated this year to expand on its valuation standards to adhere more strictly with the valuation standards of the International Valuation Standards Council. With regard to asset inspections, for example, The Red Book states that (a) inspections and investigations must always be carried out to the extent necessary to produce a valuation that is professionally adequate for its purpose; (b) the extent of valuations to be carried out by a valuer is agreed with the client at the beginning, in the terms of the engagement; (c) the degree of on-site inspection (if any) will vary according to the type of property, the purpose of the valuation and the terms of engagement agreed with the client; and (d) the valuer must retain ‘adequate notes’ relating to the inspection to carry out the valuation. Furthermore, the valuer responsible for the inspection must be named in the report, calling out a level of accountability. In the case of any market, there are certain assumptions made that need to be dealt with openly: land title must state what is to be built and what is to be the value. Assumptions made by any related party, such as builder or contractor, with regard to the price of materials or services cannot be based on assumption.

Valuation uncertainty is a given, especially where there is limited market activity that makes it difficult to find comparable market data and yields. RICS advocates to acknowledge the uncertainly and make a full disclosure. Once complete, the valuation will be transparent. In fact, the same report used for one client should be so straightforward and transparent that it could be used by many other clients.

how importANt Are VAluAtioN stANdArds? Reports generated by valuers are the bank’s assets and when the banks hold a wholly qualified asset report, the assets show through into the value of the company as well as into the risk/yield of the underlying investment. Therefore, the international valuation standards are a kind of asset accountancy. For insurance purposes as well, standards in the valuation process bring about a certain level of professional indemnity. Simply put, follow standards and receive lower insurance rates.

david faulknern is a member of RICS Asia Board of Directors. Ben Elder is RICS Global Director of Valuation.

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D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Business at the f After decades of military isolation, Myanmar's warming up. But is now a good time to invest in the country? By Rodel Ambas Jr.

urma is a place quite unlike any you know about, Rudyard Kipling once wrote. He was right, for the country remains veiled to many outside its borders, though it’s slowly becoming a land of opportunity for the few enterprising who find its untapped potential irresistible. Even before Burma (now officially named Myanmar) was annexed by the British to form part of the then British India, the country was a prosperous kingdom and a necessary trade stopover between India and China. As a result, its economy flourished and its culture infused with both Indian and Chinese influences. Burma was also the first South-East Asian country to receive

Buddhism, which has since become the state’s sanctioned religion. Fast forward to early 21st century and Myanmar is again making headlines. After a much-publicised release of democracy leader and Nobel laureate Aung Sang Suu Kyi in 2010 and a visit by US Secretary of State Hillary Clinton in late 2011 (the first visit of a top US diplomat in more than half a century), Myanmar’s relationship with the West is thawing, if not warming up. This was followed – quite expectedly – by a flurry of activity in the country’s business sector. News of the USA and the EU lifting some of the economic sanctions were seen as a welcome mat by foreign investors. As a result, prices of prime property in Yangon (formerly

Rangoon), the country’s largest city and former capital, have skyrocketed, which according to some reports have increased 39% during the first 9 months of 2012. Speculators are also pushing up prices of the little available prime residential, office and factory space, according to the Silk Road Yangon Property Index. According to the index, prices are US$85 per square foot. Hotel rates in Yangon have also jumped 65% this year, according to the same index, as a result of increased occupancy and the paucity of accommodations available to foreign businessmen. Office rentals, meantime, have risen 50% this year in downtown Yangon, with some locations charging as much as US$40 per square metre. However, all this impressive figures are mainly driven by Yangon’s shortage of quality real estate and the very high demand for them at the moment. In fact,

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frontier it is estimated that the total office space available in the city is currently less than 1% of that available in Bangkok.

Isolated no more – for now Although at the moment still unassured, Myanmar’s political thaw over the last year or so has led to the country’s dramatic transformation. A report published in Forbes indicated that Western powers scaling back or axing sanctions on trade and investment raised expectations of an economic takeoff. Everything began to change in late 2010, when Aung San Suu Kyi was freed from house arrest after an election carefully staged by the junta (which Western observers say was even rigged). The country’s new president, Thein Sein, instituted sweeping reforms, such as freeing hundreds of political prisoners, relaxing censorship laws, and cancelling a dam project financed by China. Some are comparing Thein Sein, perhaps

prematurely, to the then Soviet Union’s Mikhail Gorbachev and Apartheid South Africa’s F.W. de Klerk. After meeting with Thein Sein and Aung San Suu Kyi during her visit, Clinton urged Americans to visit the country and invest. According to one Western diplomat, the US secretary of state’s visit somewhat removed the country’s reputational risk. On April 23 the European Union suspended all sanctions against Myanmar except an arms embargo, and on May 18 the Obama administration lifted most sanctions as well. In August this year, the Asian Development Bank predicted that Myanmar will become a middle-income nation by 2030, enjoying a 7–8% GDP growth rate over the next decade. At present, the country has a 5.5% growth rate, which is pretty impressive. Despite this, its GDP per capita is the lowest in South-East Asia. However, the fact remains that

PHOTOS COURTESY OF MYANMAR MINISTRY OF HOTELS AND TOURISM

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OPENING UP

Myanmar is still a poor nation. Once considered Asia’s rising star, years of mismanagement and corruption have left the country’s infrastructure dismal at best. Electricity is sporadic and internet connection is slow. Modern conveniences such as 7-Elevens and ATMs are practically unheard of, and only one hotel – the Strand Yangon – accepts credit cards. Only a handful of foreign entities operated in the country during the decades-long isolation. This paltry list included France’s Total, Chinese oil giant and Hong Kong-listed CNOOC, South Korea’s Posco, and oil giant PTT. Now that’s changing fast. Residents say Clinton’s groundbreaking visit - followed by Obama’s visit in November of 2012 - are giving a nudge-up to the country’s property prices. Foreign businessmen are quietly flooding in, sensing that the resourcerich country could be Asia’s next big

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investment success story. As a result, Yangon is in the midst of a property boom, especially at the top end where very little quality office space is available, and for the type of housing Western businessmen expect in large Asian cities. For example, rental space in Yangon’s Sakura Tower, one of only two international standard office blocks in the downtown financial and former government district, have doubled in the space of a year to US$50 a square metre from US$25, and the smallest office, little more than a pokey room, now costs US$3,000 a month. It is a similar picture at the Centrepoint Towers just down the road, overlooking the Sule Pagoda, one of the city’s main Buddhist temples. Office space that was only US$13 per square metre in 2011 jumped to US$30 earlier this year, depending on the floor. If anything, Yangon today proves that money abhors a vacuum. As if on cue, business interest rushes in once the situation becomes favourable (or at least promising). Today, the city’s handful luxury hotels – which are booked months in advance – are packed with European, American, Australian, Japanese and South Korean businessmen. One of the important steps under-

taken by the government in recent months according to experts was the abandonment of the official government exchange rate. The government decided to unify and float its kyat exchange rates, which is expected to reduce corruption, build investor confidence and improve economic performance.

Projects According to Damien Duhamel, a managing partner at Singapore-based consulting firm Solidiance, the development of Burma’s real estate market will follow a pattern. Developers from Singapore, South Korea and Hong Kong will initially capitalise on Yangon’s economic boom by building new hotels and offices. Then a residential market orientated around expatriates will appear 5–10 years later. ‘This is similar to the trend observed in Vietnam 20 years ago,’ Duhamel added. But according to Tony Picon, associate director at the Bangkok office of

PAGODA AND POLITICS

Colliers, some developers were already renovating properties and are building new ones to meet expatriate taste. A loosening of property laws expected this year may also allow some form of foreign ownership of condominiums, similar to those in Thailand and Cambodia. However, he added that even if the law passed this year and new accommodation was made available in coming months, the supply of hotel rooms and serviced housing for expatriates would lag behind demand for the foreseeable future. But the crucial question is where in Yangon to build new apartments and condominiums. The city is surrounded by rivers and lakes and has a lot of undeveloped land on its periphery. A research conducted by Harvard University in March showed that soaring property prices in Yangon’s city centre could lead developers to build on the city’s periphery. However, Burmese developers are reluctant to build on the outskirts of the city because of a lack of infrastructure, like a network of bridges, according to business insiders. Serge Pun & Associates is not fazed, though. Through its Burma subsidiary – Thanlyin Estate Development – it is building a rental apartment and con-

PHOTOS COURTESY OF MYANMAR MINISTRY OF HOTELS AND TOURISM

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dominium complex located at the rural outskirts of Yangon. Dubbed Star City, the area can be reached from downtown by car in about 30 minutes, but the trip involves crossing two bridges and bumpy roads, so the company is planning a ferry service to offer a more convenient commute. According to Soe Thiha Hlaing, director of sales and marketing of the company, the project will emulate high-end housing developments in Singapore and other international cities. ‘We’re turning a chapter in the market,’ said Hlaing in an interview. He added that although the project will cater to Burmese citizens, the company is also paying close attention to rumours that the government will soon allow foreigners to buy properties in the country. He also said that nearly all of the approximately 500 units put on the market so far, at 70 million to 215 million kyats per unit, have been sold.

what the future holds Burma won’t be making smartphones anytime soon, but the country’s size, location and potential mean that international businesses are hoping that the current reforms will stay in place. But the tough question is whether ordinary Burmese citizens will benefit

a buyer’s guide to myanmar

from the influx of foreign business, as the country is obviously at risk of falling victim to the ‘Paradox of Plenty’ wherein a resource-rich nation suffers from underdevelopment and mismanagement (think Nigeria and Angola). And of there are still plenty of people who believe the country’s government is not serious about sustainable reform and that investors should steer clear altogether. Of particular concern are reports that human rights violations continue in ethnic minority areas. One expert who’s not as bullish is Sean Turnell, an economics professor and Burma specialist at Macquarie University in Sydney. He said the country has very few people who can struggle with building the institutions it needs, such as a system of sound property

rights and to channel funds to productive enterprises. He added that the country is still under an import-and-export-licensing system that enriches government cronies, who might be averse to reforms in case these same reforms jeopardise their wealth. Another expert also sounded a word of caution. Lex Rieffel, an economist and South-East Asia expert at the Brookings Institution in Washington, said one danger facing Myanmar is that a rush of foreign investment would overwhelm the government’s ability both to make good policies and to carry them out. ‘You need good implementation and enforcement,’ he says. ‘The introduction of democracy alone, he points out, is hardly a guarantee of effective governance.’

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Balancing act The Singapore government’s attempts to rein in its housing market may do little to prevent the influx of foreign money. By Rodel Ambas Jr.

hen reports of Australian mining magnate and world’s richest woman Gina Rinehart paid more than US$46 million (SG$57 million) for two units in the exclusive Seven Palms condominium in Singapore’s Sentosa Island came out, the city-state’s housing market got a major PR boost. This news comes while brokers are struggling to sustain healthy sales amidst a series of government-initiated cooling initiatives to keep homes affordable to its citizens, but more expensive to foreigners. For many months before the purchase the government has been trying to rein in the city’s housing market – one of the world’s least affordable – amidst many locals’ complaint that they’re being priced out of their own country’s housing market. Two such moves are the additional buyer’s stamp duty imposed in December last year and more recently the restriction on home-loan maturities. It could be disappointing for many of the world’s rich, who consider Singapore a safe place in which to park their assets. Foreign property investors, most of them coming from mainland China, Malaysia, Indonesia, and, to some extent, the USA and Australia, see Singapore as an attractive market on par with London, Paris and New York, with stability and limited land that will keep residential prices sky-high over the long term, as it was the case in the past. As the Singapore government tries to keep the city-state’s property market under check to prevent future asset bubbles, does this mean the end of Singapore as safe haven for foreign property buyers? Not yet, according to experts. Although it’s no longer posting impressive double-digit growth the way it did before, and many pundits agree that the factors that helped drive Singapore’s housing market could dissipate over the next few years (immigration-fuelled population

growth, housing undersupply and cheap money), the city-state’s housing market will remain, in the long run, very stable. Foreign buyers shied away from Singapore’s luxury housing market after the cooling measures, which slowed down the rise of private-home prices in the early part of 2012. According to Jones Lang LaSalle, there were 447 transactions of lux-

ury properties (without land) worth over US$4.052 million (SG$5 million) in 2011, but only 142 for the first eight months of this year. Fewer purchases of these apartments are expected for 2012; however, the Singapore market as a whole continues to remain healthy, with prices still rising. The luxury segment has performed well. The average unit price of luxury

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high-end market. According to Neubronner at Jones Lang LaSalle, about seven out of 10 buyers for luxury property worth over SG$5 million in Singapore are foreigners – a rate that’s unchanged from a year ago. ‘Wealthy foreigners see Singapore as a safe financial haven still,’ he said. As with any land-scarce country, property prices tend climb regardless of eco-

nomic climate. Add to this the fact the Singapore is very attractive to foreigners, who count on the city-state’s reputation as a safe haven for investment. Wealthy Asians are also attracted to Singapore because of its low taxes, top-notch infrastructure long considered one of the world’s best, and central location as a hub for regional business. It is unsurprising that the World Economic Forum in its Global Competitiveness Report 2012–2013 cites Singapore as the world’s second most competitive country, after Switzerland.

MONEY KEEPS POURING IN Singapore must balance the need to keep home prices affordable to its residents without scaring foreign investors away.

What draWs foreigners in

condos rose 2% quarter-on-quarter in the third quarter of 2012, from US$1,864 (SG$2,300) per square foot to US$1,904 (SG$2,350). However, it is still 6% lower than peak price of US$2,022 (SG$2,495) recorded in the fourth quarter of 2007. There is some initial uncertainty on the part of the wealthy and new rich, said Knight Frank Singapore’s Png Poh Soon. However, there are still some people rich enough not to care about additional fees. ‘They are looking for lifestyle offerings, and aren’t too concerned about the dollar value of the property.’ It is clear foreigners are crucial to the

The fact that Singapore’s political climate is very stable is a factor that many foreign investors consider strongly. This stability has also helped the government manage and prevent asset bubbles in the past. As a result, Singapore is still attracting more foreigners, especially the ultra rich. These same foreigners are bidding up the price of some properties, while wages for lower- and middle-class locals have stagnated over the past 10 years. Therefore, Singapore’s policy-makers must carefully balance the city-state’s need to preserve asset-value gains for its local homeowners while keeping the prices of new-built homes affordable to younger residents, especially young couples planning raise families. And according to Knight Frank’s Nicholas Holt, this balancing act will only get tougher for Singapore regulators in the coming months. Due to the latest round of central-bank actions across the globe, much cash is expected to find its way into Singapore’s housing market, which will drive prices even higher. Holt said that this is part of a bigger phenomenon in which there is a huge increase in wealth all around the world yet this wealth seems to be concentrating itself in certain cities, such as London, New York, Singapore and so on. ‘Singapore will do whatever it takes to continue to make itself attractive to foreign workers and businesses as its future depends on it,’ added Holt. ‘But it has to counterbalance this with domestic concerns of affordability.’

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SPECIAL ADVERTISING FEATURE

A Celebration of Singapore’s Fine Heritage The word Singapore – and rightfully so – conjures up an image of cleanliness,

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The Residences at Emerald Hill

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Cascadia

Aura 83

ura 83 is a freehold boutique development in District 15, situated in the prestigious eastern suburb of Katong, surrounded by private residential enclave, with optimum lifestyle and convenience. It is a 51-unit, five-storey residential development located at Duku Road, putting its unit owners in close proximity to top primary schools and amenities, such as I12 Katong, Parkway Parade and East Coast Park. The property is also conveniently located close to bus stops, Eunos MRT stations and the Paya Lebar interchange station, as well as the ECP/PIE/ KPE around Singapore. Promising privacy and coziness, Aura 83 will comprise of one- to four-bedroom units with well-thought-out space configurations. It comes with a basement carpark that also boasts an efficient layout. Aura 83’s three-bedroom units feature a spacious ceiling height of 6 metres for the living and dining areas. Meanwhile, its ground floor units will feature ceiling height of 4.8 metres.

he Cascadia is an exclusive freehold condominium development located along Bukit Timah Road, one of Singapore’s most sought-after address. Comprising 13 blocks of 10-storey condominiums, the 536-unit property is set amidst a lush tropical-themed garden. In keeping with this theme, the low-rise blocks and facilities were planned in a manner that replicates little tropical islands separated by numerous water features surrounded by abundant greenery. This luxurious development also offers a range of generous and spacious penthouse units that boasts impressive space with a north–south orientation. Depending on which unit you are in, the penthouses offer a breathtaking view of Bukit Timah Nature Reserve or overlooks good class bungalows amidst lush greeneries. When you buy a penthouse in Cascadia, you are buying a lifestyle. Its unrivalled landscaped gardens offers you a tropical surrounding like none other. You can either enjoy personal whirlpool bath or hold functions on the trellised roof terrace. Cascadia penthouses offer a much lower per-square-foot prices, ranging from S$977 to S$1,206 per square foot, as compared to typical units with an average pricing of around S$1,700, which makes it a value for money proposition.

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Fulcrum

ulcrum offers an elegant balance of water and air to form an ethereal aura around you. Its artistically tilted architecture and intricate interlocking stacking of units allow spectacular views of both the sea and city at your penthouse, accentuated by the full-height windows. Contemporary design injects a strong stylish sensibility. Details are not missed with brands like Gaggenau, Bosch and more, adding a touch of class to the fittings in the kitchen and bathrooms. Entertain in style at your own personal roof garden or take a dip at your private pool. Enjoy extreme convenience at Fulcrum that’s mere minutes away from the retail and gastronomicmecca of Katong and East Coast. East Coast Expressway and Nicoll Highway provide easy access to the CBD and Marina Bay Sands, which are just a mere 5-minute drive away. For family entertainment, Playground @ Big Splash and East Coast Park are choice options. Schools nearby include Chung Cheng High School, Tanjong Katong Primary School, Tao Nan Primary School, Dunman High School, Victoria School and Victoria Junior College. With all that and more, feel absolutely pampered and indulgent, right at Fulcrum.

The Ritz-Carlton RESIDENCES

eveloped by Hayden Properties in collaboration with the Ritz-Carlton Company, Singapore’s 36-storey Ritz-Carlton Residences is Asia’s first freehold luxury residential project. Built on an elevated ground in the highly coveted Cairnhill area, it boasts amenities and service the Ritz-Carlton brand is famous for. Typical of a serviced apartment under a well-known hospitality brand, the Ritz-Carlton Residences offers a wide range of services, including housekeeping, a 24-hour dedicated concierge, sommeliers and doorman, in addition to top-notch facilities such as 34-metre lap pool, a gym, open gourmet kitchen, a maze garden and a tennis court. But perhaps the project’s location is its most coveted aspect. It is located at 65 Cairnhill Road, an exclusive residential district adjacent to Orchard Road, Singapore’s premier shopping street. Nearby are also streets lined by an impressive collection of restored pre-war terraced houses reminiscent of Singapore’s colourful past. Hayden Properties is a subsidiary of KOP Properties, the developer behind Montigo Resorts Nongsa in Indonesia and the Hamilton Scotts.

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Lumos

he Lumos is a freehold luxury apartment development comprising 53 units of apartments and penthouses within a 36-storey block.

The iconic architecture of the building is evolved from the idea of a glittering chandelier. The Lumos is set to light up the Orchard Road skyline, heralding the future of luxurious living with its bold, iconic design. The Lumos cradles a central column of sparkling glass ‘Living Pods’, designed to resemble jewel-like crystals, with units at either side of the ‘Living Pods’ symbolising the crystal plates of a chandelier. The shape of the balconies and planters of the units at both ends form a gentle spiral, twisting and curving across different floors to give the entire structure a three-dimensional, crystalline feel. The result is a breathtaking blend of art and architecture, the epitome of modern luxury and a fitting new addition to the upper echelon of Singapore’s most prestigious developments. The Lumos is developed by Buildhome Pte Ltd, a joint venture between Koh Brothers Development and Heeton.

Silversea

ising from a lush landscape of coastal greenery, Far East Organization presents Silversea, an architectural expression of the silvery horizon where the sky meets the sea. Accentuated by balconies that spiral skyward, the towers make a bold statement in the form of a graceful sculptural wave. Situated in Singapore’s East Coast district, Silversea is poised to be a residential aspiration offering unobstructed sea views. The luxurious penthouses on the 20th floor offer superb views of the South China Sea. Clean lines and contemporary layout add to the entire feel of generously spaced penthouse homes. High ceilings and full-length windows allow natural light into the apartment, enhancing the expansiveness of the master bedroom, living room and dining room. For a touch of five-star living, the master bedroom in the penthouses will incorporate hotel-inspired features such as a mini-bar fridge, long bath, rain-shower and even a safe deposit box. This prime waterfront development offers a unique lifestyle opportunity. Residents will enjoy easy access to the bustling city centre, yet live in a world away from it all. With East Coast Park at the doorstep, residents are spoilt for choice from relaxing pursuits to vibrant water sports.

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

DesignFusion

The shift in modern design and architecture calls for versatility and a global perspective. It is a merging of East and West, and Singapore’s multi-cultural cityscape – and own unique design scene – provides the perfect backdrop for the union. By Jennifer Harrison

ingapore is an ideal business hub, a powerhouse economy and the gateway to Asia. It’s also English speaking, forward thinking, well educated and clean. Some call it ‘Asia 101’ or ‘Asia for beginners’, but there is no doubt that, whether new to Asia or Asian born, if you can stand the heat, then this is the kitchen to be in. With such a focus on business, power and money, there would seem to be little time for, well, anything fun. But a new generation of Singaporeans are emerging – ones who let their children study art instead of economics at university; ones who

demand a balance of culture with their career-driven lives; ones who want to see the beauty within, behind and surrounding their homes. This is great news for the Singapore design scene, which may be young, but is exploratory in architecture, interior design, and even accessories. Thanks to its geographical location, it’s also a great place for East and West design cultures to meet. Case in point is the Singapore–London creative consultancy company, VW+BS. It’s a one-stop shop for designers, architecture, accessories, lighting, PR, branding, even magazines. The key word here is versatility. As a multidisciplinary agency repre-

senting a variety of interests, they are better situated to adapt to the changing market of design and architecture, especially as they also endeavour to merge design markets between Western and Asian cultures. ‘We’re often working with Asians buying into the London market, so what we’re essentially doing is bringing the two cultures together,’ says Ian Macready of VW+BS. According to Macready, the beginning of a shift in modern architecture and design can be pinpointed to 1997 with the Guggenheim Museum in Bilbao, Spain. Designed by Canadian-American ‘starchitect’ Frank Gehry, The World Architecture Survey credits the Guggenheim as one of the most important works completed since 1980. In fact, due to the overwhelming success of the museum in terms of its revitalisation of the somewhat lagging Bilbao, the term ‘Guggenheim effect’

CREATIVE HEADS The men behind the Singapore–London creative consultancy group VW+BS (top left): London-based Ian Macready, Singapore-based Voon Wong and Kuala Lumpur-based Benson Saw. SPARK’s Peter Morris (top right) during the 100% Design Expo. Morris led the Supertrees project when he worked for Grant Associates (below right). A chair by Zurich-based designer Natanel Gluska (below).

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was coined in reference to how the museum transformed the city. Much has changed, however, since 1997. In the digital world, the advent of social media, for example, has helped create an international dialogue about design concept and theory. In the real world, construction in emerging markets has grown by 128%, and the predicted growth of the population is 46% between 2000 and 2050 (with as much as 70% of the world’s population living in urban areas). Not only is there the need for a different approach to design and architecture, phenomena such as the ‘Guggenheim effect’ demonstrate how architecture plays a significant role in the modern world as well as modern economies.

singApore is synonymous with luxury. whAt About design? Luxury markets as well have a whole new take on high-end design. Consumers of luxury goods are demanding more than quality that comes with a high price tag – they want to know where the product comes from (provenance), and they want their product or experience to be unique. This is true whether purchasing a new home or a purchasing a holiday experience (or even a dinner out). Above all, the experience is what the luxury consumer is buying. With the third highest per capita income in the world, Singapore knows something about luxury markets. It would seem that Singapore also has a vested interest in expanding its design scene. An official arm of the Singapore Ministry of Information, Communication and the Arts is the DesignSingapore Council. The council not only oversees the ‘adoption of design by enterprises’, they have the specific directive to develop Singapore into a city where design innovation drives economic growth. singApore As A creAtive hub The recent 100% Design expo at the Marina Bay Sands, curated by VW+BS, is another example of the emerging design scape in this small island nation. The theme of the event

SITTING PRETTY Porada’s Daisy chair (above left) and Ferrara Asiapac’s Recargo.

was 55:75:95, which are respectively the standard heights for lounge, dining and kitchen surfaces. It is an exploration of how we live, work and play and how these numbers might be used differently in the East and West. Macready and his partner, Voon Wong of VW+BS, specifically selected young, new and exciting talent from around the world, but especially from South-East Asia. ‘100% Design is new to Singapore. This year’s expo is small because we were anxious to get it started. With more planning, we expect next year’s expo to be significantly bigger,’ said Wong. Singapore was chosen for the design expo not only because of its geographically ideal location, but also for its dedication to design. Macready explains, ‘London’s 100% Design is about 15 years running, set up originally by a group of designers who realised there was no design show in London. There were trade shows, but no design shows. It then became the cornerstone of a much wider festival of design in London and the expo became part of the ‘rollercoaster’ that saw London become a creative capital. ‘The DesignSingapore Council were aware of how the 100% Design expo had been instrumental in creating London as a creative hub.’

AwArd-winning design Singapore-based property developers are winning international awards (Keppel Land and CapitaLand are but two recent examples). And Singapore’s Urban Redevelopment Authority (URA) also recently announced the winners of the URA Architectural Heritage Awards (2012) that

honor projects with exceptional work in heritage building conservation and restoration. Among the five winners is The Sultan, which the URA describes: ‘Ten outstanding specimens of ornate “Late” to “Art Deco” shop house-style buildings, circa 1900 to 1940s, have been imaginatively transformed into a regal boutique hotel where vintage charm has checked in for a long-term stay.’ Yet another example of recent cuttingedge architecture in Singapore is the addition to Raffles Place – dubbed Tower Two. The original Raffles Place tower was architected by Professor Kenzo Tange in the 1980s and it is a signature landmark in the city’s business district, as well as an iconic image on the Singapore skyline. Professor Tange’s son, Paul Noritaka Tange, was the architect for Raffles Place, Tower Two. But if you want an extreme example of creative design at work in Singapore, look no further than the Gardens by the Bay and the super cool Supertrees. Project leader Peter Morris came to Singapore from England to work on the city’s national aquatic centre, but stayed for the Gardens by the Bay project. Morris says the Supertrees are more than an indication of Singaporeans’ open mind towards creative design. They are ‘an invitation to sustainable, green design.’ Not only do they look space age, they are ‘environmental engines – they convert sunlight into solar power, act as air venting ducts and collect rainwater,’ explains Morris. When asked who initiated the idea for the project, Morris responded, ‘It was driven by a love of plants by the client – which was the National Parks of Singapore. It’s a passionate manifestation of a city in a garden concept.’ Passionate, versatile, global and even sustainable design has already arrived in Singapore. Compared to other cities like Milan or even London, Singapore’s design scene may be young, but its evolution is in response to a changing marketplace and merging cultures which, at least in part, is why the designation of ‘creative hub’ is close at hand.

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D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Helping Asians invest in overseas properties

ALILA

s Asia moves to prosperity, many high-networth individuals throughout the region are looking overseas for their next property purchase. And the idea to invest overseas has become increasingly more attractive as property developers ply on inducements. It is almost customary now to be offered top-notch facilities, apartments designed by the world’s top decorators and architects, in addition to guaranteed rental returns, low-interest mortgage, low deposit and the premise of high capital appreciation. This is where the SMART Investment & International Property Expo excels. Established in 2004, the SMART Property Expos have been held in some of Asia’s best property markets, such as Singapore, Hong Kong and Kuala Lumpur. With over 27 expos in 8 years, SMART has opened its doors to over 1,500 exhibitors and more than 100,000 quality investors, and welcomed the voice of hundreds of senior-level industry experts. With biannual shows in Hong Kong, the frequency itself is a testimony of its success in delivering buyers to property developers and real estate agents. The opportunity for first-hand information about overseas property can be gained from the SMART Expo. It is the only event that offers a diversified portfolio of properties from the attractive investment destination countries, such as Australia, the UK, Thailand, Singapore, Malaysia, Hungary and many more. Check out the following upcoming SMART Expos:

27–30 DECEMBER 2012

Set on 21,000 square metres of land, Alila Seminyak offers you the opportunity to own a piece of the last remaining beachfront property along the Seminyak coastline, in the heart of Bali’s upscale and most happening area. Fully operated and managed by Alila Hotels & Resorts, the luxuriously appointed suites fuse chic, contemporary design and all the comforts you’d expect with expanded living spaces designed like a private home. Purchase of a suite rewards you with guaranteed returns* from a share of net room revenues from the day hotel operations begin, plus a number of days’ free stay per year at the hotel based on a season-based point system. Investment returns. Indulgent pleasures. Enjoy the best of both worlds. *Terms and conditions apply

Revel, relax, and be effortlessly rewarded. www.alilaseminyak.com

16–17 MARCH 2013 8–9 JUNE 2013

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WorldWide Investments

Art Index International

FOR YOUR PROPERTY PORTFOLIO

ART INVESTMENT SPECIALISTS

UK – PRESTIGIOUS PROPERTIES Located in Central London’s most desirable post-codes. Tastefully renovated properties with classic façades and contemporary interiors. Prices from £350,000 to £2,500,000

The importance of fine art in a well-diversified investment portfolio has grown significantly in the last 20 years. The art market not only survived but thrived during and after the financial crisis of 2008. This has seen many investors flock like moths to a flame to Fine Art investment. But where do you begin when it comes to investing in art? Art Index International can help.

AUSTRALIA – PERTH NEW HOUSES Located in the Perth Metropolitan area. Custom built over 4–6 months by a leading developer. Freehold, fully managed, ideal for own stay or investment. Prices from A$565,000 MIGRATION INVESTMENT Permanent residency and citizenship within the EU. 100% success rate. Fast turnaround. Ideal for your children’s education, career development and retirement within Europe. Safe haven for your investment portfolio. Low corporate tax for your business. Grab this opportunity while you can!

Art Index International will source iconic examples of International and Australian Fine Art. From highly established and frequently traded artists. We offer clear, transparent and reliable advice, update you on the fine art market, manage your investment and rent the artwork to corporate clients offering a guaranteed return of between 7–10.25% per annum.

USA – DISCOUNTED SINGLE FAMILY HOMES & CONDOS Freehold fully renovated investment properties. Located in good neighborhoods in New York, Orlando and Miami. Fully managed and tenanted. Recession prices from US$73,000 to US$550,000

Partnered with our Sydney office, Art Index International works with national and international clientele who are seeking to broaden the scope of their investment portfolio, family trust or self-managed superannuation fund.

UK – NEW BUILD. BELOW £30,000 DEPOSIT REQUIRED! Built in 2011. Located in Manchester. Fully managed. Tenanted yielding up to 7.5% gross per year. Great value with prices from just £89,875 with non-status developer financing

Art Index International is Singapore’s leading fine art investment house. Our office and viewing space is located at 16 Collyer Quay, Level 21 in the heart of Singapore’s CBD. Call us today for more information on +65 6818 9139.

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D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Dynamic Joy Investments

Platinum Victory Property

REAL ESTATE ADVISORY PROPERTY MANAGEMENT

SDN BHD

Edgewater Residences comprise Lakefront homes and luxury lakeside apartments in a majestic, waterfront location within the cosmopolitan heart of Varsity Lakes academic and business precinct.

FACE – PLATINUM SUITES Platinum Victory Face Project, a mixed development over 5 acres of freehold land on Jalan Sultan Ismail. Its first phase, Platinum Suites, entails 51-storey, fully furnished luxury condominiums.

Varsity Lakes is a A$2 billion development and is now 95% complete. On completion it will comprise 4,500 homes, 50,000 square metres of commercial space at Varsity Central, house more than 10,000 residents and employ 6,500 people. This thriving locale is home to Bond University which has an unparalleled reputation for academic excellence and Varsity Central business precinct, part of the Pacific Innovation Corridor and home to a range of notable world leading, blue-chip companies such as IBM, Telstra, AAPT, Minter Ellison Lawyers, Gotalk, AON Insurance and Federal and local government departments, to name a few. Edgewater Residences have been designed with the end user in mind and offer a relaxed waterfront lifestyle in a secure, peaceful enclave. Edgewater’s prime location is walking distance to Bond University, the restaurants, cafes, tavern and shopping of Market Square lifestyle precinct, Varsity Central Business District, Varsity medical centre and local schools. An outstanding value in the waterfront property sector, which is always in high demand with limited availability, Edgewater Residences represents a significant lifestyle investment.

LOCATION Platinum Suites is central to notable HQ in the Central Business District (CBD) and neighbouring landmarks include Petronas Twin Towers and KL tower. Surrounding neighbourhoods comprise of high-end residential, five-star hotels, vibrant nightlife, retail shopping complexes, corporate offices and entertainment precincts. A short strolls to the prestigious Kuala Lumpur City Centre Park, a delight for nature lovers. The Dang Wangi LRT and Bukit Nanas monorail stations are a few minutes’ walk for destinations throughout the city. RESIDENCES Designed with the versatility of SOHO (small home office) concept, Platinum Suites are ideal for both small office and private residence. The Suites offers an extensive repertoire of layouts ranging from 850 to 1,500 square feet (79 to 140 square meters) that suit your lifestyle. The selection runs from one-bedroom to three-bedroom units with options of study and maid’s quarters in selective units. Each unit will be assigned its own private parking bay.

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Silverscape Residence

UNIQUE

HATTEN CITY

.PTU -VYVSZ MJWJOH DPOEPNJOJVNT t 5IF m STU UBMMFTU CVJMEJOH JO .FMBLB o MFWFM t ;FSP JOUFSFTU QBZNFOU EVSJOH DPOTUSVDUJPO QFSJPE t 4USBUFHJD MPDBUJPO t *OUFHSBUFE NJY EFWFMPQNFOU t &YDMVTJWF 4LZ $MVC NFNCFSTIJQ XPSUI 3. t .PSF UIBO NJMMJPO UPVSJTU BOE CVTJOFTT USBWFMMFST B ZFBS t &BTZ BDDFTT UP /PSUI 4PVUI )JHIXBZ ,-o4JOHBQPSF WJB "JS ,FSPI UPMM t 0WFS DBS QBSL CBZT t 4JMWFSTDBQF TFSWJDFE SFTJEFODFT PDDVQJFT UXP PG UIF GPVS UPXFS CMPDLT UIBU NBLF VQ 1BSDFM PG UIF )BUUFO $JUZ t 0Ăł FST B SBOHF PG TUZMJTI DPOEP MJWJOH XJUI QSFNJVN MBZPVUT t *U T EFTUJOFE UP become another prized landmark in the heart of Melaka. BUILDING STRUCTURE 45 floors twin towers with a total of 32 Level Service Residence fronting the Straits of Melaka 5PXFS " VOJUT t 5PXFS # VOJUT FACILITIES UI 'MPPS *Om OJUZ 1PPM 'VODUJPO 3PPN 4BVOB (ZN ##2 1JU Squash Court, Business Centre, Club & Bistro 27th Floor Meeting Room, Leisure Room, Theater Room SKYCLUB PRIVILEGES Located at the 43rd to the 45th floors .FNCFSTIJQ PG 3. MJGFUJNF t 6Q UP DPSQPSBUF EJTDPVOUT PO QVCMJTIFE SPPN SBUFT GPS )BUUFO )PUFM t 6Q UP EJTDPVOUT on retail purchases (At all participating outlets â&#x20AC;&#x201C; Dataran Pahlawan, Hatten Square and Elements Mall)

uniQue is a Belgian-Thai developer specialising in outstanding real estate projects. The company is in search for personal answers, pure beauty, miracles and secrets, and with a pronounced mission to create an exclusive architectural project on the most selected locations in Koh Samui by following needs and visions, pushing boundaries and rediscovering paradise. Developing special areas and genuine magic places with respect for ecology, community and people. uniQue realise great architectural projects with an explicit preference for beauty and design, by carefully choosing the places where you rest your body, refresh your mind and invest your money. Itâ&#x20AC;&#x2122;s all about fulfilling long-term dreams. The third phase of the project consists of two- and threebedroom apartments and penthouses from 104 to 224 square metres of privately owned space, three- to sixbedroom pool villas with 400â&#x20AC;&#x201C;1,000 square metres of living space. Residents of the newest phase will be able to enjoy and use the five-star hotel amenities and facilities, sky lounge, first-class dining, infinity pool overlooking the entire project, in-villa private dining services, exclusive party catering, all including property/rental management upon completion of the last phase of the project. Truly uniQue!

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Queensland has long been affectionately known as the â&#x20AC;&#x2DC;Sunshine Stateâ&#x20AC;&#x2122;. While its perfect weather is a major draw-card for people migrating interstate or internationally, Queensland has become the economic powerhouse of Australia. This is why over QFPQMF SFMPDBUFE UP 2VFFOTMBOE EVSJOH UIF o Australian fiscal year. On average, more people migrate to Queensland than to any other state or territory in Australia. The Queensland government, in conjunction with the Australian government, has implemented a number of strategies to increase housing supply and stimulate the construction industry. The demand for rental properties in Queensland has increased exponentially and investors all over the world itching at the chance to invest in Queensland. Why? Well itâ&#x20AC;&#x2122;s simple: 1. Strong returns 2. Minimal vacancy rates 3. Impressive capital gains 4. Market stability 5. Tax and depreciation benefits (PPE TVQQMZ PG RVBMJUZ GSFFIPME JOWFTUNFOU QSPQFSUJFT So, if youâ&#x20AC;&#x2122;re an investor, youâ&#x20AC;&#x2122;ve by now decided that your next investment will be in Queensland, Australia. If youâ&#x20AC;&#x2122;re an astute investor, youâ&#x20AC;&#x2122;ve by now decided that youâ&#x20AC;&#x2122;ll be investing with Queenslandâ&#x20AC;&#x2122;s most successful developer and builder of investment properties since 1952. Visit heran.com.au for more details today!

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

The housing slump may soon be over in Australia’s tourist capital. By Rodney Prestia

Opportunity in Australia Australia’s

golden coast R

eal time data is essential in ensuring that, at the time of purchase, you are not only buying right but also ensuring a safe, secure and sustainable investment.

There are two sleeping giants in the Australian property market at the moment: Brisbane and the Gold Coast, both located in South East Queensland. Brisbane is Australia’s third largest city and Queensland’s capital. In a recent Jones Lang LaSalle report, ‘A New World of Cities’, Brisbane topped the list of the world’s 20 fastest growing new cities in terms of gross domestic product (GDP). The Gold Coast (Australia’s tourist capital and sixth largest city) is located less than an hour from Brisbane. In the last five years, the Gold Coast experienced its own downturn on par with the US housing and economic crisis. Times have been so tough that

unemployment rose and prices of apartments fell as low as 40–50%. In fact, the global economic downturn had a significant impact on the Gold Coast property market, more so than any other place in Australia. This is in part due to the new construction market, controlled by four or five key players, all borrowing heavily from overseas financial institutions. These developers were wiped out overnight as their funding sources came crashing down. Not only were their loan portfolios sold on to other financial institutions for as low as 30 to 40 cents on the dollar, the new financiers took control of the properties and then commenced action to recoup their funds. The price of new apartment stock fell by up to 50% from 2009. Financial institutions appointed receivers and managers to take control of many developments, and are currently selling at heavily discounted prices. For

the first time in my memory, not one crane can be seen in the usual development hotspots of Broadbeach, Surfers Paradise or Southport. Just recently my father looked at an apartment he sold in 1986 for A$380,000 that is for sale today for the same price!

whY the gold coAst downturn? There are several other factors why the Gold Coast has suffered such a sharp downturn in value. In the 1990s, for instance, there was a huge influx of Japanese investment that led to a multitude of high-rise beachfront accommodation soaring along the shoreline of one of the world’s most famous beaches. Prices were affordable and every middle-to-high income earner on the east coast of Australia who owned a holiday home also owned an apartment in the Gold Coast. New development throughout 2000–2010 was governed, as I men-

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FEATURE DEC EM B ER 2 0 1 2 — JA NU A RY 2 0 1 3

tioned earlier, by four or five major developers, most of whom were hit hard by the financial downturn. Following the financial crisis, the new projects of these major players were placed in the banks’ hands. And the crisis did not only hit the corporate clients, it also hit the Australian consumer. For the consumer, the first thing to go was the holiday home. Owners scrambled to offload their excess properties in an effort to repay debt, in some cases, forcing down prices below cost. On top of this, the Australian dollar continued to soar, deterring foreign investment and tourism (which ultimately drives the Gold Coast). In fact, thanks to the strength of the Australian dollar, families from Sydney and Melbourne that used to have annual holidays in the Gold Coast now found it more affordable to head to Bali and Fiji. Foreign visitors also dwindled as taking a trip to Australia, and in particular, to the Gold Coast, became too expensive. It’s hard to compete with places like Thailand, Bali or Fiji, especially when comparing their currencies to Australia’s. It is my opinion that the Australian dollar has experienced a false reading over the last few years: it’s not that the Australian dollar is so strong – it’s that the American dollar has been so weak. But when the Australian dollar finally corrects itself (as most economists believe it will), it will be an exciting time for the Gold Coast’s tourism industry.

And now the good news The Gold Coast is evolving quickly. There are some real and positive signs, such as a population growth and the affordability of the Gold Coast (people are moving there en masse). Additionally, the secondary market has continued to sell and it is projected to get even stronger as, in September of this year, the state government increased the First Home Owners Grant from A$7,000 up to A$15,000 (US$7,238–15,510). First, homeowners in Queensland are taking advantage of the government’s incentive. Second, with property prices at an

the gold coast’s infrastructure

all-time low, there is a hive of activity – and evident signs of resurgence – in the Queensland property market. Take note, however, that a severe shortage of new stock is inevitable, as supply has dried up even though population growth continues. Basic economics state that when demand exceeds supply, prices must rise. Rents will rise first, closely followed by selling prices. To my clients I always say: follow the infrastructure investment because infrastructure means growth and employment.

with the proper infrAstructure in plAce, the mArket is there for the tAking A two-bedroom apartment in the Gold Coast can represent phenomenal value at around A$450,000 (US$465,320). And with some of the best universities in Australia in expansion mode, the cost of educating children and maintaining an investment property would be considerably less than other parts of the country. The other factor that excites me about the Gold Coast is that the average price per square foot is down to around A$350 (US$362), compared to around A$600 (US$620) in Melbourne CBD for new two-bedroom apartments.

At the end of the day, everybody has their own philosophy on how and where they choose to invest. I base my decisions on three basic yet simple fundamentals. 1 Will I be able to rent my property?

2 Is there government-funded

infrastructure in place where I intend to buy?

3 Am I buying near the bottom of the

market?

For me the Gold Coast ticks the three boxes in my investment fundamental strategy. The secret is in the buying, and since seeing is believing, go on and grab the sunscreen and a cheap flight and check out the Gold Coast for yourself. The market can only go one way and that’s up. It’s a safe and secure investment and one that will be a profitable addition to your property portfolio.

rodney prestia

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11/29/12 4:35 PM

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11/29/12 9:39 PM

COUNTRY GUIDE D E C E M B E R 2 0 1 2 - J ANU ARY 2 0 1 3

to use a local name-holder, with whom the foreign buyer enters into contracts. Locally known as Hak Pakai Atas Hak Millik, or the right of use above freehold land, the Hak Pakai 25 years but extendable to 100 years. The following documents (also signed by the local nominee, if using one) are required:

INDONESIA STATISTICS Official Name

Republic of indonesia

capital city

Jakarta

pOpulatiON

248,645,008 (July 2012 est.)

1 Mortgage agreement

time ZONe

utc +7

cuRReNcy

indonesian rupiah

2 Power of Attorney, in order to grant exclusive rights to mortgager to release the mortgage

GOveRNmeNt

Republic

3 Financial Loan Agreement

ReGiON

South-east asia Bahasa indonesia (offcial, standardised

4 Power of Attorney for all rights to the land

Official laNGuaGe

laNd aRea

1,811,569 sq km

WateR aRea

93,000 sq km

cOuNtRy cOmpaRiSON tO the WORld

uS$2,099

ReNt peR mONth (for a 120-sqm apartment)

uS$1,955 9.31%

ReNtal yield

6 Statement of indemnity (for nominee)

TAxI Traditional taxis, while legally required to use the meter, are known to be corrupt; however, Bluebird taxi service has earned a reputation for honesty and security (they are light blue and include an emblem of a bird on the side). NOTE: With any taxi service, insist that the meter is used, always carry spare coins so that you do not overpay a driver who claims he/she has no change, and ask the driver to repeat your destination to ensure you are going to the right place. rAIl Commuter rail is available for the major cities, but service is unreliable. Trains across the nation, from Bali, Java and Sumatra, are generally punctual, and bookings are computerized. Buy tickets at the station, or, starting in 2012, bookings are available online (though the website is not translated into English).

9 Lease agreement to grant buyer 25 years lease plus 25 year automatic extension. All transactions of land rights must be via deeds

SOURCE GLOBAL PROPERTY GUIDE

According to Knight Frank, Jakarta is the strongest performer in its Global Cities Report Highlights Q3 2012, with price growth surging 28.5% in the year to September 2012. electRicity

230 v/50 hz (Type C)

climate

tropical; hot, humid; more moderate in highlands

CulTureS/eThnICITIeS (2000 census) 66.3% 11.2% 13.4% 19.1%

JavaNeSe SuNdaNeSe maduReSe miNaNGkaBau

BetaWi BuGiS BaNteN BaNJaR

OtheR OR uNSpecified

relIgIonS (2000 census) iSlam pROteStaNtiSm ROmaN cathOliciSm hiNduiSm OtheRS OR uNSpecified

2.4% 2.4% 2% 1.7%

29.9% 86.1% 5.7% 3% 1.8% 3.4%

exPATS As of 2010, there are approximately 46,000 expats living in Indonesia.

The hoW To’S of InDoneSIA hoW To geT 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 fee of US$25. Citizens of Argentina, Canada, Germany, the USA, the UK, and 60 other countries are eligible for VOA. org/consular/visitvisa.htm. For more information visit www. hoW To buy ProPerTy Although foreigners are technically not allowed to own freehold land, there are legal, commonly used ways to get around this. For example, foreigners are allowed to own condominiums as long as they don’t own the land on which the structure stands. The most common option for foreigners, however, is

buS Coach services are comfortable, modern and reliable. City buses, especially the economy class, are not advisable to foreigners. Schedules are some understanding of the language, the entire

8 Statement letter: no second mortgage

aveRaGe pRice/peR SquaRe metRe

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,

5 Statement letter which outlines the proof of payment for the property 7 Power of Attorney for IMB Authority for Building Permit

ProPerTy bASICS

lAnD

Registry. hoW To APPly for A morTgAge Thanks to the Hak Pakai name is on the title deed thus allowing the foreigner to apply for a mortgage. Note, however, that foreigners are allowed to own one Indonesianthat this is not a second mortgage. The best bet may be to contact an International Mortgage broker, such as Savills Private Finance, International Private Finance or Overseas Mortgage Direct. hoW To oPen A bAnk ACCounT Generally a minimum deposit will be required, which varies from bank to bank. Documents required to open an account include passport, residency permit (or temporary stay permit), and, in some cases, a letter from an employer or sponsor. Some major banks in Indonesia include American Express Bank, Bank Bali, Bank of America, Bank Indonesia, Citibank Indonesia, and Standard Chartered Indonesia.

TrAnSPorTATIon AIr 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 has regular across the country and around the world, including Amsterdam, Bangkok, Beijing, Guangzhou, Hong Kong, Jeddah, Kuala Lumpur, Melbourne, Perth, Seoul, Shanghai-Pudong, Singapore, Sydney, Taipei, and Tokyo-Narita. their respective hubs to Jakarta, including Air China Kong), China Airlines (Taipei), Emirates (Dubai), Etihad (Abu Dhabi), Korean Air (Seoul), Malaysia Airlines (Kuala Lumpur), Philippine Airlines (Manila), Qantas (Sydney), Qatar Airways (Doha), Thai Airways International (Bangkok) and Vietnam Airlines (Ho Chi Minh City). 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.

mAJor holIDAyS JaN 1

New year’s day

date vaRieS

chinese New year

date vaRieS

the prophet’s Birthday

date vaRieS

Good friday

may 6

Buddha’s Birthday

may 17

ascension day

date vaRieS

ascension of muhammad

auG 17

independence day

date vaRieS

Start of Ramadan

date vaRieS

end of Ramadan

date vaRieS

hari Raya aidiladha

date vaRieS

islamic New year

dec 25

christmas day

heAlTh heAlTh CAre There is a national healthcare coverage for Indonesians, but does not cover foreigners, although the services are open to foreigners for a fee. Major cities include private hospitals that are expensive, but clean and relatively luxurious, including state-of-the-art equipment. heAlTh rISkS The entire archipelago, except urban areas, poses risk for tropical diseases such as malaria, dengue fever, Japanese encephalitis, and Chikungunya Leptospirosis, an infection caused by bacteria of the genus Leptospira, is another disease common during the rainy season. People travelling to Indonesia are advised to get themselves vaccinated for vaccine-preventable diseases, such as those against hepatitis A and B, typhoid, Japanese encephalitis, and rabies. For more information, visit wwwnc.cdc.gov/ travel/destinations/indonesia.htm.

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COUNTRY GUIDE D E C E M B E R 2012 - J A N U AR Y 2 0 1 3

more foreigners to settle in the country (successful applicants under 50 cannot work and those over 50

MALAYSIA STATISTICS

the MM2H programme include a ten-year residency pass and tax-free car importation or purchase. The following is a very high-level overview of the process of buying property:

Official Name

malaysia

capital city

kuala lumpur

pOpulatiON

29,179,952 (July 2012 est.)

time ZONe

utc +8

cuRReNcy

malaysian ringgit

GOveRNmeNt

federal constitutional monarchy

ReGiON

South-east asia

Official laNGuaGe

malay

laNd aRea

329,613 sq km

WateR aRea

1,190 sq km

cOuNtRy cOmpaRiSON tO the WORld

4 Apply for State Authority Consent. 5 The remainder of the purchase price is paid (cash or mortgage).

aveRaGe pRice/SquaRe metRe

uS$2,182

ReNt peR mONth (for a 120-sqm apartment)

uS$1,356

ReNtal yield

6.21%

SOURCE GLOBAL PROPERTY GUIDE

According to Knight Frank, home prices in Malaysia rose 6.6% year-on-year to the third quarter of 2011. In an effort to curb skyrocking house prices, the Malaysian government will double teh entry price for foreigners buying property in the country from US$162,972 to US$325,944. electRicity

240 v/50 hz (type G)

climate

Tropical; annual south-west (April to October) and north-east (October to February) monsoons.

iNdiaN

50.4% 23.7% 11% 7.1%

OtheR

7.8%

malay chiNeSe iNdiGeNOuS

2 Upon signing the offer letter, pay 2% of purchase price. 3 Pay the additional 8% after the Sales and Purchase agreement is drafted and signed.

ProPerTy bASICS

CulTureS/eThnICITIeS (2004 est.)

1 After identifying the property to purchase, hire a local lawyer to negotiate the price and draft an offer letter to the seller.

relIgIonS (2000 census) iSlam BuddhiSm chRiStiaNity hiNduiSm

66.3% 13% 10% 6.3%

cONfuciaNiSm, taOiSm OtheR tRaditiONal chiNeSe ReliGiONS

2.6%

OtheR OR uNkNOWN

1.5% 0.8%

NONe

exPATS About 0.25% of population, or 70,000

The hoW To’S of mAlAySIA hoW To geT In – VISA requIremenTS All travellers need a passport valid for at least 90 days following the departure date from Malaysia, however, 6 months validity is strongly recommended. Passports must have blank visa pages. It is also for any connections. Citizens of the USA and the UK may visit Malaysia for up to 90 days without a tourist visa. Singaporeans have up to 30 days. (www.imi.gov.my/). hoW To buy ProPerTy Foreigners are allowed to purchase residential and commercial property in Malaysia, with a minimum purchase price of RM500,000 (US$163,430) (may vary from state to state) and a 10% deposit. Foreigners need to apply for a permit from the authorities, and approval can take two to six months. In 2006, the Ministry of Tourism launched the Malaysia My Second Home Programme (MM2H) to encourage

6 The Sales and Purchase agreement is sent to the land registry and the title deeds are transferred to the buyer’s name, subject to approval of the State Authority.

hoW To APPly for A morTgAge Malaysia welcomes foreign investment and banks guidelines vary from bank to bank. Expatriates re(which may be quite subjective), and additional incentives are often offered for repayment plans, such at about 6.8%). Banks usually require, in addition to a passport, wage slips, bank statements and a form from the applicant’s employer, if relevant. Some banks in Malaysia that offer mortgages to foreigners: UOB, HSBC, Standard Chartered, EON Bank, Hong Leong Bank hoW To oPen A bAnk ACCounT Foreigners can open a bank account in Malaysia without a residency permit, but will need a letter of reference from a Malaysian resident or employer. Passport is required. Some banks in Malaysia include: Citibank Berhad, HSBC Bank Malaysia Berhad, OCBC Bank Malaysia Berhad, Standard Chartered Bank Malaysia Berhad, The Bank of Nova Scotia Berhad, The Royal Bank of Scotland Berhad, UOB

TrAnSPorTATIon AIr Malaysia’s main international gateway is the kuala lumpur international airport (www.klia.com.my). This airport handles about 35 million passengers eve-

lAnD Malaysia has an excellent network of highways as well as federal, state and municipal roads. Due to the availability of good roads, land transportation is the most common mode of travel in Malaysia. buS Air-conditioned express buses and non-airconditioned regional buses are available from Kuala Lumpur to many other towns in Peninsular Malaysia, and also between other towns and cities in Malaysia. Buses connecting towns and cities throughout the country charge fares according to the distance covered. TAxI City taxis are required by law to use the meter. Interstate taxis and minivans are also available – the interstate taxi stand in Kuala Lumpur is located on the level 2 of the Pudu Raya Bus Terminal. rAIl There are both Light Rail Transit (LRT) and monorail services available in Kuala Lumpur. Keretapi Tanah Melayu Berhad (KTM) has a rail network that stretches from north to south and east to west in Peninsular Malaysia and they offer several special deals for tourists. The train in Malaysia is extremely affordable, safe, comfortable (air-conditioned) and offers comfortable sleeping births for longer journeys into and out of the country.

mAJor holIDAyS JaN 1

New Year’s Day

date vaRieS

Chinese New Year

date vaRieS

Second Day of the Chinese Lunar New Year

feB 1

Federal Territory Day

date vaRieS

The Prophet’s Muhammad’s Birthday

date vaRieS

Thaipusam

date vaRieS

Good Friday

may 1

Labour Day

date vaRieS

Wesak Day

JuNe 2

The Yang di-Pertuan Agong’s Birthday

date vaRieS

Hari Raya Puasa

auG 31

National Day

Sept 16

Malaysia Day

date vaRieS

Hari Raya Haji

date vaRieS

Deepavali

date vaRieS

Muharram

dec 24

Christmas Eve

dec 25

Christmas Day

dec 31

New Year’s Eve

heAlTh

Lumpur from their respective hubs, such as Air France

heAlTh CAre Universal, high-quality health care is available in Malaysia, although some remote areas are not well covered. The Ministry of Health offers a network of nationwide clinics and hospitals, which are generally stocked with the latest, state-of-the-art equipment. Some private healthcare providers include Colonbia Asia Hospital, Hospital Penawar, Kempas Medical Centre, Klinik Rakya & Hospital Bersalin, Medical Specialist Centre, Regency Specialist Hospital, Tey Maternity Specialist & Gynae Centre.

Airlines (Taipei), China Eastern (Shanghai-Pudong), China Southern (Guangzhou), Emirates (Dubai), Etihad (Abu Dhabi), Japan Airlines (Tokyo-Narita), KLM (Amsterdam), Korean Air (Seoul), Lufthansa (Frankfurt), Qatar Airways (Doha), Singapore Airlines (Singapore), Thai Airways International (Bangkok), and Vietnam Airlines (Ho Chi Minh City). There are also other international airports in Penang, Kuching and Kota Kinabalu and smaller domestic airports in most state capitals.

heAlTh rISkS Being a tropical country, Malaysia presents the same health risks as Indonesia. The following diseases are common in the country: malaria, dengue fever, chikungungya, and Japanese encephalitis. People travelling here are advised to have their routine vaccination up-to-date (MMR, DPT and poliovirus). For more information, visit wwwnc.cdc.gov/travel/ destinations/malaysia.htm.

14th busiest in terms of international passengers. Flag carrier malaysia airlines (www.malaysiaairlines.com) – one in only six 5-star airlines rated by cities across the globe, including Bangkok, Beijing, Delhi, Frankfurt, Hong Kong, Istanbul, Jakarta, London-Heathrow, Los Angeles, Manila, Melbourne, Osaka, Paris-CDG, Seoul, Shanghai-Pudong, Singapore, Sydney and Tokyo.

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COUNTRY GUIDE D E C E M B E R 2 0 1 2 - J ANU ARY 2 0 1 3

ippines is more or less the same as it is in any country – always hire and follow the advice of a registered real estate agent and/or specialty attorney.

PHILIPPINES STATISTICS Official Name

Republic of the philippines

capital city

manila

pOpulatiON

92,337,852 (July 2012 est.)

time ZONe

utc +8

cuRReNcy

philippine peso

GOveRNmeNt

Republic

ReGiON

South-east asia

Official laNGuaGeS

filipino (standardised register of and english

Tagalog)

laNd aRea

298,170 sq km

WateR aRea

1,830 sq km

cOuNtRy cOmpaRiSON tO the WORld

ProPerTy bASICS aveRaGe pRice/SquaRe metRe

uS$3,204

ReNt peR mONth (for a 120-sqm apartment)

uS$1,356

ReNtal yield

8.62%

SOURCE GLOBAL PROPERTY GUIDE

According to Jones Lang LaSalle, approximately 154,000 condominium units are expected to be completed between 2012 and 2016. This is in stark contrast to the 7,000 completed by the turn of the millennium. The country’s property boom is being result of improved economic outlook. electRicity

220 v/60 hz (Type A, B, C)

climate

tropical marine; north-east monsoon (November to April); south-west monsoon (May to October)

relIgIonS (2000 census) ROmaN cathOliciSm iSlam evaNGelical chRiStiaN iGleSia Ni kRiStO OtheR chRiStiaN OtheR/uNSpecified

80.9% 5% 2.8% 2.3% 6.5% 2.5%

The hoW To’S of PhIlIPPIneS hoW To geT In – VISA requIremenTS All tourists wishing to stay longer than 21 days need a visa. The following are the minimum requirements for applying a temporary visitor’s visa: passport/ travel document valid for at least 6 months beyond the intended period of stay in the Philippines; visa application forms; two passport-size photos; proof of tickets for return or onward journey to the next port of destination; and payment of visa fees. Citizens of Brazil and Israel are allowed to enter the Philippines without a visa for a stay not exceeding 59 days. In addition, citizens of Hong Kong and Macau are permitted to enter the Philippines without a visa for a stay not exceeding 14 days. Nationals from most other countries who are travelling to the Philippines for business and tourism purposes are allowed to enter the country without visas for a stay not exceeding 21 days. Visit dfa.gov.ph for a complete list and more information. hoW To buy ProPerTy Foreigners cannot own land in the Philippines (unless married to a Filipino) but can purchase condominium units or apartments. Businessmen and other investors can enter into a contract with Filipino colleagues for part ownership and divide the property. Purchasing a condominium or apartment in Phil-

1 Make an offer and place a deposit of typically 10%. 2 Let the attorneys and estate agents draw up the offer contracts. 3

the property’s structure.

4 Submit a formal offer letter, taking into consideration the results of the inspection, which is signed by both the buyer and seller (created by your attorney). 5

Deed search to be sure the property does not have any liens or monies owing and is free for sale/purchase.

6 Close the sale with a formal purchase agreement and submit to the Land Authority for approval (may take 6–8 weeks).

hoW To APPly for A morTgAge Paying cash for property is preferable for foreigners as lending criteria is somewhat subject and can vary bank to bank. It is best to deal with a bank where you have a long history or take the time to get into a bank and create a history of accounts and borrowing to apply for a mortgage, pay a larger down payment on the property than is required/expected. hoW To oPen A bAnk ACCounT Generally a minimum deposit will be required, which varies from bank to bank. Documents required to open an account include passport, residency permit (or temporary stay permit), and, in some cases, a letter from an employer or sponsor. Some of the major banks in Indonesia include: Bank of America, Standard Chartered Bank, Bank of the Philippine Islands, Citibank, Metrobank, HSBC, and Rizal Commercial Banking Corporation.

TrAnSPorTATIon AIr Air transportation is the primary way to enter the Philippines. The country’s main international gateway is Manila’s Ninoy aquino international airport (www.manila-airport.net) and, to a lesser extent, clark international airport (www.dmia.ph) located in a former US military base in Pampanga. Flag carrier philippine airlines (www1.philippineairlines.com/ regional airports across the archipelago, including Cebu, Davao, Gen. Santos, Iloilo, Kalibo and Tagbilaran. In addition, the airline has regular scheduled

lAnD About one-third of roads in the Philippines are paved. Car rental is available, which is best organised with a reputable agency or through your hotel. Driver licence issued abroad can be used for up to 90 days. buS/JeePney Buses operate throughout the country and are the best bet for longer distances. Another form of popular transportation in the Philippines is the jeepney (or just ‘jeep’), which carry between 16 and 30 passengers and may or may not be air-conditioned. The jeepney evolved after the war. TAxI Traditional taxis, regulated by law, have yellow-coloured licence plates, taxi signs, a registration number and a meter, which is mandatory. Note: With any taxi service, insist that the meter is used, always carry spare coins so that you do not overpay a driver who claims he/she has no change, and ask the driver to repeat your destination to ensure you are going to the right place. rAIl Three metro lines serve the Metro Manila Pasay City in the south to Quezon City in the north and runs 20 kilometres over fully elevated track along Taft and Rizal Avenues in Manila towards EDSA in Quezon City. The second line has 11 stations and runs from Recto Avenue in downtown Manila to Pasig City in the eastern fringes of the metropolis. The third line has 13 stations that runs over EDSA, Metro Manila’s main thoroughfare.

mAJor holIDAyS JaN 1

New Year’s Day

apR 9

Araw ng Kagitingan (Day of Valor)

date vaRieS

Maundy Thursday

date vaRieS

Good Friday

may 1

Labour Day

JuN 12

Independence Day

date vaRieS

Eid al-Fitr (End of Ramadan)

auG 27

National Heroes Day

date vaRieS NOv 1

All Saints’ Day

NOv 30

Bonifacio Day

dec 25

Christmas Day

dec 30

Rizal Day

dec 31

New Year’s Eve

heAlTh

their respective hubs, including Air China (Beijing),

heAlTh CAre There is a national healthcare coverage for Filipinos, which is available to foreigners for a fee. Coverage and services are good and improving, and many doctors and nurses have been trained in the USA. Top Philippine hospitals include the Makati Medical Center, Asian Hospital and Medical Center, The Medical City, and St. Luke’s Medical Center.

China Southern (Guangzhou), Delta (Detroit), Emirates (Dubai), Etihad (Abu Dhabi), Japan Airlines (Tokyo-Narita), KLM (Amsterdam), Korean Air (Seoul), Malaysia Airlines (Kuala Lumpur), Qantas (Sydney and Brisbane), Qatar Airways (Doha), Singapore Airlines (Singapore), and Thai Airways International (Bangkok). Other regional airports that also have internamactan international in Cebu and francisco Bangoy international in Davao City. Regional airports also serve Laoag City, Kalibo (near the island resort of Boracay), Bacolod, Iloilo, and Cagayan de Oro city, among others.

heAlTh rISkS The following are the most common diseases in the Philippines: malaria, dengue fever, Japanese encephalitis, cholera, diarrhoeal diseases, and leptospirosis. Travellers to the Philippines are advised to have their routine vaccination (MMR, DPT and poliovirus) up-to-date, in addition to getting vaccinated against hepatitis A and B, typhoid, Japanese encephalitis, and rabies (the latter for people who will come in close contact with animals). For more information, visit wwwnc.cdc.gov/ travel/destinations/philippines.htm

America, including Hong Kong, Singapore, Bangkok, Kuala Lumpur, Beijing, Jakarta, Bali-Denpasar, Tokyo, Osaka, Seoul, Melbourne, Sydney, San Francisco, Los Angeles, Toronto and Vancouver.

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STATISTICS Official Name

Republic of Singapore

capital city

Singapore

pOpulatiON

5,353,494 (July 2012 est.)

time ZONe

utc +8

cuRReNcy

Singapore dollar

GOveRNmeNt

parliamentary Republic

ReGiON

South-east asia

Official laNGuaGeS

english, mandarin, malay, tamil

laNd aRea

687 sq km

WateR aRea

10 sq km

cOuNtRy cOmpaRiSON tO the WORld

192

ProPerTy bASICS aveRaGe pRice/SquaRe metRe

uS$16,350

ReNt peR mONth (for a 120-sqm apartment)

uS$4,817

ReNtal yield

2.95%

SOURCE GLOBAL PROPERTY GUIDE

infrastructure and strong and stable economy, Singapore’s property market is among the world’s priciest. According to Knight Frank, the value of real estate in Singapore surged 50.5% from the last quarter of 2006 to the same period in 2011. electRicity

230 v/50 hz (Type G)

climate

tropical

CulTureS/eThnICITIeS (2004 est.) chiNeSe malay iNdiaN OtheR

relIgIonS (2010 census) BuddhiSm iSlam taOiSm chRiStiaNity NONe OtheR

worldwide, including New York, London, Sydney, Bangkok, Beijing, Melbourne, Milan, Manchester, Munich, Frankfurt, Tokyo, São Paulo, Rome, Seoul and Shanghai, among others.

Visit www.ica.gov.sg/ for more details.

SINGAPORE

77.3 14.1% 7.3% 1.4%

33.3% 14.7% 10.9% 18.3% 14.5% 0.7%

exPATS Approximately 1.45 million expats live in Singapore. Expats are generally welcomed in this very multicultural society. There are a large number of expats (sixth highest percentage in the world) and many who come to Singapore on an employment contract from another country and for a set period of time, such as 2 or 5 years. Some of these make no effort to understand the local culture and therefore give other expats a bad rap. Caucasian expats are referred to as ‘Ang Mo’, which literally means red hair or skin. This is a harmless term generally meant with no offence, although may be used on occasion by older Singaporeans out of frustration with ill-mannered foreigners.

The hoW To’S of SIngAPore hoW To geT In – VISA requIremenTS All travellers need a passport valid for at least 6 months following the departure date from Singapore. Passports must have blank visa pages. It is also for any connections. Visitors from the following countries will require a visa: Afghanistan, Algeria, Bangladesh, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Egypt, Georgia, India, Iran, Iraq, Jordan, Lebanon, Libya, Morocco, Myanmar, Nigeria, China, Pakistan, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, Yemen and Palestine.

hoW To buy ProPerTy There are two types of properties foreigners can purchase in Singapore: non-restricted and restricted. Restricted properties are those that require approval from the government, which may include land, landed properties and Housing Property Act, however, regulates all foreign ownership in Singapore. It allows foreigners to purchase apartments in non-condominium developments without the need of government approval. To obtain approval to purchase land or landed properties, a form is available for download at the Singapore Land Authority website (www.sla.gov.sg). In order to protect your interests, engage the services of a professional estate agent or specialty attorney. 1 Option to purchase agreement requires 1% of the purchase price and is usually prepared by the seller’s agent or attorney. This agreement allows 14 days consideration before proceeding with the purchase. 2 Offer to purchase agreement is prepared by the buyer’s agent or attorney and is an alternative to the option to purchase agreement. 3 Inspections are stated in the option to purchase agreement which allows the buyer to have a professional inspection of the property before completing the sale.

lAnD Transportation in the island state of Singapore is extremely easy. The roads are modern, paved and well posted. Buses, taxis, trains abound and take you anywhere on the island, or beyong. The Land Transit Authority of Singapore regulates buses, taxis and trains. www.lta.gov.sg. buS Buses compliment the rail system. Falling under the designation SMRT, taking a bus is easy. Either purchase a travel card at an MRT station (subway or metro stations) called EZ Link, or simply pay in change when boarding the bus. Tell the bus driver (most of whom speak English) where you are headed and he or she will tell you the fare. Bus stops are everywhere and well posted. TAxI There are several taxi companies in Singapore. Some are under the LTA of Singapore and others are from private companies. They’re all good, safe and reliable. The fares are generally reasonable but you will incur different charges for peak/off peak hours as well as differor waiting for one at a designated taxi stand. Catching a taxi between the hours of 4 and 5pm is with petrol and wash their vehicles. Peak hours, which are generally before and after work and weekend

4 Close of sale is under the jurisdiction of the attorneys and usually takes eight to ten weeks to complete.Statement letter which outlines the proof of payment for the property.

Note: With any taxi service, insist that the meter is used, always carry spare coins so that you do not overpay a driver who claims he/she has no change, and ask the driver to repeat your destination to ensure you are going to the right place. rAIl Served by both light rail and mass transit trains, Singapore’s island nation is very well connected. Referred to as the MRT, there are stations everywhere, with more and more under construction. To ride the rails, purchase a ticket at any station for a one-off destination or an EZLink card for multiple travels by bus, train or even taxi.

hoW To APPly for A morTgAge The Monetary Authority of Singapore approves banks authorized to issue mortgages. It is helpful, although not necessarily required, to be a permanent resident of Singapore, if not a citizen. The average loan to foreigners covers 70–80% of the purchase price. Banks that offer mortgages include HSBC, Standard Chartered, Maybank, Bank of China, BEA, UOB, OCBC, POSB, DBS, Citibank, Lloyds TSB, Hong Leong Finance. hoW To oPen A bAnk ACCounT Opening a bank account in Singapore as a foreigner is jaw-droppingly easy, especially is using a private bank. Simply provide a passport and the

mAJor holIDAyS

out the necessary forms. ATM cards and internet banking registration is provided on the spot

TrAnSPorTATIon AIr Singapore’s changi international airport (www.changiairport.com) is a world-class airport and one of South-East Asia’s main aviation hub. It has three main terminals and a fourth one that caters primarily to low-cost carriers. In 2011, the airport handled 46.5 million passengers, making it the world’s seventh busiest and Asia’s second (after Hong Kong) in terms of

JaN 1

New year’s day

dateS vaRy

chinese New year

date vaRieS

Good friday

may 1

labour day

may 5

vesak day

auG 9

National day

date vaRieS

hari Raya puasa

date vaRieS

hari Raya haji

date vaRieS

deepavali

dec 25

christmas day

heAlTh

heAlTh CAre The quality of health care in Singapore is excellent, with many government-run clinics and privately owned hospitals. Insurance is available to expats through many organisations and is recommended, as the cost of health care is high. Reputable hospitals include Changi General, National University Hospital and Singapore General.

Qantas, AirAsia, JetStar Asia, China Airlines, Thai Airways International, Lufthansa, Delta Airlines, Silk Air, Philippine Airlines, Emirates, British Airways, Finnair, KLM, and Air France, among others. Flag carrier Singapore airlines (www.singaporeair.com

heAlTh rISkS Mosquito-borne diseases such as dengue fever and chikungunya are common Singapore, especially during the rainy season. Before going to Singapore, travellers are advised to have their routine vaccination (MMR, DPT and poliovirus) up-to-date.

garoo Route’ between Australia and Europe. More than 100 airlines operate about 6,100

pore to over 220 cities in about 60 countries and

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There are three ways to purchase property in Thailand: (1) Purchase a leasehold villa/condo investment

THAILAND STATISTICS Official Name

kingdom of thailand

capital city

Bangkok

pOpulatiON

67,091,089 (July 2012 est.)

time ZONe

utc +7

cuRReNcy

thai baht

GOveRNmeNt

constitutional monarchy

ReGiON

South-east asia

Official laNGuaGe

thai

laNd aRea

510,890 sq km

WateR aRea

2,230 sq km

cOuNtRy cOmpaRiSON tO the WORld

uS$2,996

ReNt peR mONth (for a 120-sqm apartment)

uS$1,957

ReNtal yield

6.53%

SOURCE GLOBAL PROPERTY GUIDE electRicity

230 v/50 hz (type a, B, c)

climate

tropical; rainy, warm, cloudy, south-west monsoon (mid-May to September); dry, cool, north-east monsoon (November to mid-March); southern isthmus always hot and humit

CulTureS/eThnICITIeS (2000 Census)

OtheR

relIgIonS (2010 census) BuddhiSm iSlam chRiStiaNity OtheR

75% 14% 11%

94.6% 4.6% 078% 0.1%

exPATS 0.5% of the population are expatriates, or 350,000. Expat acceptance in the local culture is very high, especially considering that much of Thailand’s income is derived from tourism.

The hoW To’S of ThAIlAnD hoW To geT In – VISA requIremenTS All travellers need a passport valid for at least 90 days following the departure date from Thailand; however, 6 months’ validity is strongly recommended. Passports must have blank visa pages. It is also for any connections. Citizens from the ASEAN countries, plus Australia, Canada, Hong Kong, Japan, Russia, the USA and most EU countries do not need a visa to visit Thailand on holiday for 30 days or less. Citizens of South Korea, Brazil, Chile and Peru have up to 90 days. Visa on Arrival (VOA) is available to citizens of Bhutan, China, Cyprus, Czech Republic, Estonia, Hungary, India, Kazakhstan, Latvia, Lichtenstein, Lithuania, Maldives, Mauritius, Oman, Poland, Russia, Saudi Arabia, Slovakia, Slovenia, Uzbekistan, Ukraine, Ethiopia, Taiwan, Bulgaria, Andorra, Malta, Romania, San Marino. cation at www.immigration.go.th/ hoW To buy ProPerTy Foreigners cannot purchase land, but the structure upon the land can be secured as leasehold. As agent and/or specialist attorney.

2 Transfer the funds to purchase the property to a Thai bank account so that the bank can record

property. Thai residents can skip this step.

aveRaGe pRice/SquaRe metRe

chiNeSe

1 Make an offer. Allow your estate agent and/or attorney to do any negotiations.

a Thor Thor 3, which indicates that the funds

ProPerTy bASICS

thai

amount of time. (2) Purchase through a Thai Limited Liability company with several shareholders. (3) Marry a Thai local. Purchasing property in Thailand is fairly straightforward and follows a similar outline to other countries.

3 Through your attorney or estate agent, carry out a title search and land survey. This is required by law. 4

engineer to inspect the property for structural requirements, including plumbing and electricity.

5 Based on the results of the title search, land survey and inspection, negotiate the price and any work to be done before purchase. 6 Sign a contract to purchase the property, along with the seller.

hoW To APPly for A morTgAge It’s better to buy property in Thailand using cash as obtaining a mortgage is not available to foreigners unless married to a Thai citizen. If this is the case, then foreigners may receive up to 70% of the purchase price. hoW To oPen A bAnk ACCounT Opening a bank account in Thailand as a foreigner can be somewhat confusing, as some banks have subjective criteria. A passport is always required, as well as a minimum deposit (the amount will vary not only from bank to bank, but in some instances from bank representative to representative). Often, but not always, a work permit is necessary as well as a letter of reference from a Thai national and the bank in your home country where you hold an account. (Note: Be sure to open the account at a branch with a convenient location because the branch where you open the account is the branch where you will need to visit for any questions or business matters.) Some of the major banks in Thailand include ACL Bank, Citibank, Bangkok Bank, Export-Import Bank, HSBC, Standard Chartered, and Union Overseas Bank.

TrAnSPorTATIon AIr Thailand’s main point of entry is Bangkok’s Suvarnabhumi airport (www.suvarnabhumiairport.com/ detail_airline_information_en.php). Handling 47.9 million passengers in 2011, the airport is the sixth rier Thai Airways International, where it has regular Other carriers that operate from the airport are Bangkok Airways and Orient Thai Airlines. (Beijing), Air France (Paris), British Airways (London), Emirates (Dubai), Garuda Indonesia (Jakarta), and KLM (Amsterdam), Qatar Airways (Doha), and Qantas (Sydney), among others. 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. lAnD Transport in Thailand is varied and chaotic, with no one dominant means of travel. For long distances, buses dominate, and in rural areas and for short trips, motorbikes dominate. Cars are becoming increasingly popular, especially with tourists and expats, but the current system of roads has not yet caught up to the demand of drivers. buS Buses are the most popular means of long distance travel in Thailand. Tour and VIP class coaches are luxurious, while city and economy-class buses are colourful. Local buses and Bangkok city buses come in various sizes, types, prices. Some have air conditioning and others open a window or possibly have a fan. TAxI Traditional taxis are legally required to use the meter, although you may have to insist. There are an abundance of taxis in Bangkok and in other larger another. Note: With any taxi service, insist that the meter is used, always carry spare coins so that you do not overpay a driver who claims he/she has no change, and ask the driver to repeat your destination to ensure you are going to the right place. rAIl Bangkok is the only city in Thailand with a metro and tour bus system. Taking the train to see the rest of the country, however, is a Thai experience worth the adventure, especially because Thailand has one of the best rail systems in the world, and it’s economically viable. Purchase tickets online for convenience. You can also buy tickets at any train station, and all tickets, except for third class, require a reservation.

mAJor holIDAyS JaN 1

New year’s day

JaN 2

New year’s day Observed

maR 7

makha Bucha

apR 6

chakri day

apR 13–17

Songkran

may 5/7

coronation day

JuN 4

visakha Bucha

auG 2

asalha Bucha

auG 12/13

the queen’s Birthday

Oct 23

chulalongkorn day

dec 5

the king’s Birthday

dec 10

constitution day

dec 31

New year’s eve

heAlTh heAlTh CAre Although the country’s healthcare system has is still more to do. Thais do not do particularly well in comparisons to other nationalities, such as Singaporeans or Malaysians. Better-off patients are likely to use one of the 450 private hospitals in Thailand. heAlTh rISkS The following are the most common diseases in Thailand: malaria, dengue fever, Japanese encephalitis, cholera, diarrhoeal diseases, and leptospirosis. Travellers to the Thailand are advised to have their routine vaccination (MMR, DPT and poliovirus) up-to-date, in addition to hepatitis A and B, typhoid, Japanese encephalitis, and rabies. For more information, visit wwwnc.cdc.gov/travel/ destinations/thailand.htm

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VIETNAM STATISTICS Official Name

Socialist Republic of vietnam

capital city

hanoi

pOpulatiON

87,840,000 (July 2011 est.)

time ZONe

utc +7

cuRReNcy

vietnamese dong

GOveRNmeNt

marxist-leninist single-party state

ReGiON

South-east asia

Official laNGuaGe

vietnamese

laNd aRea

310, 070 sq km

WateR aRea

21,140 sq km

cOuNtRy cOmpaRiSON tO the WORld

ProPerTy bASICS aveRaGe pRice/SquaRe metRe

ReNt peR mONth (for a 120-SQM apartment)

uS$1,110

ReNtal yield

SOURCE GLOBAL PROPERTY GUIDE

According to CBRE, Vietnam’s home prices have been declining for some time. And with prices softening, residential buyers stay out of the market for the time being.

etnam, Chesterton, is offering a 50-year lease, which gives the buyer many of the rights of ownership. Most notably about the Vietnamese property market, however, is that the sales are conducted by the price of gold. hoW To APPly for A morTgAge Mortgages in Vietnam are uncommon, especially as the land belongs to the people and is regulated by the state. Most foreign banks give out mortgages, but only up to about 50%, which is quite low to the 70–90% lending ratios in more developed nations. This is changing, however, as demand is on the rise, and banks in Vietnam are already exceeding their quotas for property lending (2012) in order to meet the current demand. Forecasts put the annual growth in the home loan market at 15% per year for the next several years. Banks in Vietnam that offer mortgages include ACB, ANZ Bank, Citibank, Standard Chartered, and Vitecombank. hoW To oPen A bAnk ACCounT Opening a bank account in Vietnam as a foreigner is surprisingly easy. Most banks require little more than a passport and completed application. In many cases, applications for bank account can be submitted online. Some of the major banks in Vietnam include:

electRicity

220 v / 50 hz (Type A, C and G)

ACB

Standard Chartered

ANZ Bank

Techcombank

climate

tropical in south; monsoonal in north with hot, rainy season (may to September) and warm, dry season (October to march)

Citibank

Vietcombank

CulTureS/eThnICITIeS (1999 Census) kiNh (viet) tay thai muONG

85.7% 1.9% 1.8% 1.5%

relIgIonS (2010 census) BuddhiSt iSlam taOiSt/daOiSt chRiStiaN NONe OtheR

1.5% 1.2% 1.1% 5.3%

khmeR mONG NuNG OtheRS

33.3% 14.7% 10.9% 18.3% 14.5% 0.7%

exPATS 0.8% of population, or 74,000

The hoW To’S of VIeTnAm hoW To geT In – 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 passportsized photos and cash (US dollars) for the stamping fees. Please check with the Vietnamese visa authority hoW To buy ProPerTy In Vietnam, all land is collectively owned and regulated by the state. This means that no one – neither foreigners nor locals – may own land. Foreigners can buy a residence and lease the land from the government, and resident foreigners can purchase homes, but may not sublet them. 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 Vi-

Shinhan Vietnam Bank

TrAnSPorTATIon AIr 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 ing 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. hubs to Ho Chi Minh City, which include Air China China Eastern (Shanghai-Pudong), China Southern (Guangzhou), Emirates (Dubai), Japan Airlines (TokyoNarita), Korean Air (Seoul), Lufthansa (Frankfurt), Malaysia Airlines (Kuala Lumpur), Philippine Airlines (Manila), Qatar Airways (Doha), Singapore Airlines (Singapore), Thai Airways International (Bangkok) and Turkish Air (Istanbul). Hanoi’s Noi Ban international airport is the country’s major gateway in the north. Vietnam Aircities across the world, including Bangkok, Beijing, Frankfurt, Hong Kong, Kuala Lumpur, London, Moscow, Paris, Seoul, Shanghai, Singapore and Tokyo. Eastern, China Airlines, Japan Airlines, Korean Air, Malaysia Airlines, Qatar Airways, Thai Airways Interto Hanoi from their respective hubs. Other regional, smaller airports serve Da Nang and Hue. lAnD An international driver licence is not accepted in Vietnam. Renting a car is also quite unusual, but possible, especially if you arrange a driver with the car. Road condition in Vietnam is sub-par, and there is no

such thing as courtesy on the roads. buS It the most popular mode of transport for travellers in Vietnam, as it is extremely inexpensive. There are plenty of long-distance bus services that connect the major cities. However, buses are often not air-conditioned (check when booking), are slow, overcrowded, and subject to the conditions of the roads, which are not excellent. Inner-city buses are in better shape and can take you between destinations within the city. There are also an ample amount of tour buses, which charge very little because they make a commission on the places where you shop as you go. TAxI Select only accredited taxi services in the major cities of Vietnam or risk being ‘taken for a ride’ when it comes to the fare. Generally, among the reputable taxi providers, the service is safe, comfortable and reasonably priced. Motorcycle taxis called xe ôm (literally ‘hugging vehicle’) are widely used by locals and tourists. Be extra fares. Note: With any taxi service, insist that the meter is used, always carry spare coins so that you do not overpay a driver who claims he/she has no change, and ask the driver to repeat your destination to ensure you are going to the right place. rAIl Probably the best way to see the landscape of Vietnam is through rail travel. Safe, comfortable and affordable – not to mention air-conditioned – rail is the ideal mode of transport for Vietnam. through Hanoi, Hue, Danang, Nha Trang and Saigon (and back). Sleeper cars are available for long journeys as well as restaurant cars. The views are spectacular, to say the least.

mAJor holIDAyS JaN 1

New year’s day

JaN 23–26

tet Nguyen dan/vietnamese New year, loosely translated as the feast of the first morning, also known as tet. the most important holiday of the year.

maR 31

Gio to hung vuong day, commemorating the mythical hung kings.

apR 30

Ngay thong nhat, vietnam victory day liberation day, marking the day with the North vietnamese captured Saigon (ho chi minh city). also known as the ‘fall of Saigon’.

may 1

Ngay quoc te lao dong, international labour day

Sept 2

National day, to mark the formation of the democratic Republic of vietnam (North vietnam)

heAlTh heAlTh CAre Vietnam is working with the Thai government in order to improve its healthcare delivery services. Currently, there is no real national healthcare coverage in Vietnam, which means private clinics and hospitals are even more important. The quality of health care is generally regarded as good, although the services still need drastic improvement. Hospitals in Vietnam that primarily cater to expats include International SOS and Columbia Asia International Clinic. heAlTh rISkS The following are the most common diseases in Vietnam: malaria, dengue fever, Japanese encephalitis, cholera, diarrhoeal diseases, and leptospirosis. Travellers to the Vietnam are advised to have their routine vaccination (MMR, DPT and poliovirus) up-to-date, in addition to hepatitis A and B, typhoid, Japanese encephalitis, and rabies. For more information, visit wwwnc.cdc.gov/travel/ destinations/vietnam.htm

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CONVERSATION DEC EM B ER 2 0 1 2 — JA NU A RY 2 0 1 3

Mudian Crafted How do you create a kitchen that s both beautiful and functional? The women at Mudian know the answer, because they re not only designers, they re cooks as well. By JS Lee

udian Pte Ltd is a Singapore-based boutique furniture house specialising in kitchens and wardrobes. Starting with six carpenters and a dream, Mudian has designed and manufactured high-end, original design solutions with a modern sensibility since 1997. But there’s more to this furniture house than sawdust and design schemes. In an otherwise male-dominated industry, Mudian is run by women, and these women can cook. Property Life recently sat down with the Managing Director of Mudian, Calsia Lee, at the recent 100% Design expo in Singapore to find out more about these cooking enthusiasts who also design kitchens. Tell me about mudian – how did it start? We are Singapore based, starting 15 years ago with six carpenters, but we knew nothing about manufacturing. We’ve since grown to 32 employees, all based in Singapore. We design mainly residential solutions for kitchen and wardrobes. My partner and I do the designing – three of our four designers are women and they all cook. In terms of planning a good kitchen, that helps. I have met other designers and architects, especially men, who don’t cook and have realised that the design of their kitchens versus that of one who cooks are very different. Apart from good design – aesthetically good design – the functional side of it is really very important. Who are your clients? Eighty-five per cent of our clients are in Singapore. We also have homeowners who lived in Singapore for a while and moved back to their home country in Europe, Mauritius, Maldives, and they liked their kitchen so much they get us to produce another one and send it to where they live. On some, we do the installations and others get their own local contractors. Here in Singapore, we have a fair bit of clients who live in HBD flats [Housing and Building Development flats]. The lifestyle

trend is changing and people are spending more money on interior renovation, such as US$24,500–32,685 (S$30,000–40,000) to renovate a kitchen in an HDB flat. What’s in the pipeline? Due at the end of November, Mudian is launching a modular kitchen. That’s how Europeans sell their kitchens. This will help extend our market to reach more apartment dwellers who want a good kitchen system at a more affordable price. We construct the modular kitchen so that homeowners can remove and replace parts of the kitchen without affecting the counter top. This is very handy, for example, when the cabinet under the sink – which is typically the first unit to deteriorate from exposure to moisture and cleaning products – needs replacing. Another affordable option is door replacement. If the existing cabinets are in good shape, there’s no need to create waste. If the carcass of the kitchen is in good condition, for example, but the homeowner just doesn’t like the look of it, then replacing the façade will make it feel like a brand-new kitchen. Beyond the kitchen We fabricate wardrobes, study tables, coffee tables… we can offer the whole package. We work with the homeowners – they can’t be going around looking for suppliers, so, except for sofas and chairs, we do the whole package.

male-dominated industry? It’s a tough business to be in. When we first started, I immediately had guys – contractors – who came to work for me, and they would say things like, ‘Go home and cook!’ It’s a male-oriented area of work. But we are technically sound. We know how cabinets are constructed and we cook, so we know what’s necessary. In the beginning there was definitely that stereotype mentality, but it’s different now.

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D ECEMBER 2012 — J ANU AR Y 2 0 1 3

A great day and night on the green Gone are the time and social limits to golfing in Singapore.

ingapore golfers can now hit the greens by day and by night, without having to pay prohibitive fees for membership in an exclusive golf club. All this is possible at the centrally located Marina Bay Golf Course. Easily one of the best public golf courses in Asia, Marina Bay Golf Course is the first and only public golf course that offers an unimpeded view of Singapore’s impressive skyline. Opened in November 2006, it is strategically situated at the heart of the city, rendering unnecessary the long drive to out-of-town fairways and making it the perfect choice for aficionados who simply cannot stay away from the game. Linking history to the present, the links-style golf course recreates milestone in the history of the game and of Scotland on its full, 18-hole course that stretches over 6,561 yards with a par of 72. Putting golfers to the ultimate test, South African designer Phil Jacobs designed the course with 91 treacherous pot bunkers with varying sizes and depths, offering the golfer challenges at every turn. With its wide variety of hole-to-hole lengths and numerous undulations, golfers are assured hours of challenge and enjoyment, with a promise of a good time at the signature hole – the par-3, 13th, complete with an island green design. From Wednesday to Friday, tired executives can leave their business cares at the office to de-stress and enjoy a good game

PUTT SESSION

under the stars, with the course’s sunshine-bright floodlights. Marina’s fleet of buggies are equipped with a Global Positioning System facility that offers visitors a unique golfing experience. Golfers who wish to master their game can practise their swings and moves on the

four-tiered driving range with its 270-metre outfield. Considered Singapore’s longest and largest, the driving range allows as many as 146 people to drive at the same time and is open from 7 a.m. to 10:45 p.m. every day (except Monday mornings when it closes for maintenance). It also features four practice greens where golfers can polish their skills to heighten their confidence before an actual game. After a round on the fairway, golfers can stroll over to The Canopy Café to unwind, which serves refreshing drinks to cool tired bodies, and Western, Japanese and local cuisines that delight golfers’ palates while they take in Singapore’s breathtaking view that only Marina Bay Golf Course’s vantage location can offer. Since golfers love the outdoors, the café also offers al fresco dining options. Other facilities include a pro shop, a wellness studio, a golf academy, and my golf kaki golf club, an associate member of the Singapore Golf Association licensed to issue and maintain USGA Golf Handicaps. With its excellent design and high-calibre facilities, Marina Bay Golf Course has received numerous accolades. The course was rated by the Asian Golf Monthly Awards as among the 7th Best New Courses in Asia in 2006, the Top Three Best Value for Money Golf Experience Golf Course in Asia Pacific in 2011, and, more recently, the Top Three Best Course in Singapore in 2012.

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Luxury in an unlikely place

The Ma Du Zi Hotel in Bangkok really punches well above its weight. This pretty little boutique establishment looks and feels like something that’s been transplanted from North-East Asia to the heart of Sukhumvit. Walking through the door is a relaxing experience that transports the guest to a sophisticated oasis of charm and peacefulness within the sometimes-overwhelming jumble and muddle of Bangkok’s tourist district. The rooms are sumptuous – if not slightly quirkily laid out – with generously sized king beds and, something unusual for a hotel, walk-in closets. The

in France, it has an eclectic Euro-Asian essence. The staff are very friendly, polite and unobtrusive – with their minds constantly set in ‘customer satisfaction and the tranquility of guests’ mode. To that end the in-room service is impeccable with individual espresso equipment (with Bon Café coffee pouches) and the Bose entertainment systems are a lovely touch. Asok BTS (Skytrain) station is a little under a 5 minutes’ walk, as is Terminal 21, Bangkok’s new over-the-top international-themed mega-mall. Sukhumvit is generally pretty safe, and there is a wide selection of shopping on the doorstep of Ma Du Zi – from the night market at Nana BTS (one stop away) to the big malls at Siam BTS – which are only four stops away. Ma Du Zi is a wonderful establishment and we highly recommend staying there. Prices start from US$110 a night. Alexander Knight

Little diner,

big food LITTLE DINER 789 BUKIT TIMAH ROAD, SINGAPORE

Have you ever seen a hamburger so big? With the pickles and toothpicks sticking out of the top, it looks more like a 1950’s depiction of an alien spacecraft. Called the Empire Burger, keeping with the diner’s NY theme (and not just the food—décor is very urban chic reminiscent of NY’s lower east side), the burger comes with three beef patties, bacon, cheese, egg, onion, lettuce, tomato, hand cut fries, mixed greens, and a challenge: ‘scale the heights’ of the Empire Burger and join the Empire Burger Hall of Fame. Two of my dining companions shared the burger with no care or intention of finishing the lot. Instead, they rather enjoyed the meal for the sake of the meal—fantastic quality—a simply scrummy burger and fries. Besides, after having starters, there was just no chance they were going to finish it off. And the starters were well worth ordering – we shared crab cakes, smoked duck breast salad and calamari, and were well pleased with the quality and selection. I thought the crab cakes were the best I’ve had since leaving New England over 10 years ago (New England being the home of the crab cake). We topped off the meal with a lovely, well-priced New Zealand sauvignon blanc called Baby Doll. Without a doubt, I will be back. The brunch menu is Jennifer Harrison calling me. About the executive chef: Chef Michael Quinn hails originally from Kerry, Ireland. Having lived in New York City for the past 12 years, he has combined both Irish and American philosophies towards food.

For more information, visit www.maduzihotel.com

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FEATURE D ECEMBER 2012 — J ANU AR Y 2 0 1 3

Asset diversification:

why mutual funds add up In an investment environment where everything seems risky, diversification offers a relatively safe approach. Here’s how. By James Norman It was a wise man who once said: ‘Don’t put all your eggs in one basket.’ But what did he really mean? Well, if you drop the basket, you’ll break all your eggs. So spread your eggs around to avoid disappointment. In personal investment terms, this proverb refers to the reduction of risk achieved by investing in a variety of assets. In other words, diversification. In this article I shall explore diversification in more detail, look at how to achieve it and whether it’s really possible at the current time for the standard investor. What assets should be included in my diversified portfolio? In broad terms there are only six direct asset classes in the world that one can invest into. They are as follows:

CASH Legal tender or coins that

can be used in exchange for goods, debt or services. Sometimes cash also includes the value of assets that can be converted into cash immediately. A significant risk of holding cash is inflation or even hyperinflation, often the result of a failed attempt to print money to avoid the deflationary measures that would be caused by austerity. Inflation or hyperinflation results in the collapse of buying power. So, as inflation rises, your cash can buy a smaller percentage of a particular good. At the current time, three of the world’s major currencies – US dollar, pound and euro – are all viewed negatively due to their devaluation through significant quantitative easing. Nevertheless, cash needs to be part of your portfolio to provide liquidity for dayto-day living and unexpected rainy-day circumstances. A general rule of thumb is to keep a ‘cash cushion’ equivalent to three to six months’ income.

PROPERTY Good old bricks

and mortar or even land. There are two reasons for owning property. First, you need some place to live. Second, for investment purposes, with the goal of generating profit either through income (e.g. rent) or through capital appreciation (e.g. profiting from a resale) or in most cases both. Risks and barriers for entry to owning property can include high deposit requirements (often 20% or more), volatile property prices, high mortgage repayments, inconsistent rental income, high maintenance costs and natural disasters. Property prices generally, after significant falls in 2009, have stabilised between 2010 and 2012. Property values have recovered in Asia and in London, but fundamentals remain weak elsewhere. Many should consider some specialised property assets, such as student accommodation (see my article in September–November issue of Property Life).

SHARES / EQUITIES / STOCKS An investment that

refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains as the value of the stock rises. Of the various asset classes, shares arguably carry the most risk. However, ownership of shares in the right companies offers significant potential for financial reward. Like other investments, share ownership tends to follow a risk-versus-reward trade-off – in return for accepting greater risk, an investor who buys shares in a company anticipates the chances of financial reward will be greater than owning other types of assets such as bonds. There are two major risks to shares, with one much more serious than the other. The lesser risk has to do with volatility, namely, the ups and downs of a share’s price over time. The other is the risk of losing some or all of one’s investment due to a serious and permanent decline in the business prospects of a company. If you have

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FEATURE DEC EM B ER 2 0 1 2 — JA NU A RY 2 0 1 3

an appetite for risk and the knowledge and time to monitor and research the companies to pick, shares should make up a proportion of your portfolio. There is one thing the 2008–2009 financial crisis has taught us, though – proceed with caution! Getting diversification within a share portfolio can be costly due to minimum board-lots (minimum purchase amounts, for example, of often 500 shares or more).

COMMODITIES

Economic commodities are regarded as goods and services. However, in the context of financial commodities (i.e. physical commodities), these are basic resources and agricultural commodities including iron, ore, salt, sugar, coffee beans, soybeans, aluminium, copper, rice, wheat, gold, silver and platinum. Soft commodities are those that are grown, while hard commodities are the ones that are extracted through mining. Another important class is energy commodities, which include electricity, gas, coal and oil. Personal direct investment in commodities is highly specialised and storage is also a huge problem. Prices for commodities are also hugely volatile. As the world’s population continues to expand, shifting demand and constrained supply present significant opportunities. Precious metals (gold and silver particularly) act as a great hedge against financial instability and currency devaluation. For instance, the price of gold has been rising steadily since 2002 and is up over 400% in that time frame.

BONDS A debt investment

in which an investor loans money to an entity (corporate or government) that borrows the funds for a defined period of time at a fixed interest rate. Thus, a bond is a form of loan: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Investors receive a higher interest rate for emerging market bonds to compensate for the higher risk of default. Interest rates conversely are low for developed government bonds (e.g. 10-year US Treasury bonds currently pay at only 1.85%). The market price of the

bond will vary over its life: it may trade at a premium (above purchase price) or at a discount (price below purchase price). Minimum investments are often $250,000+, so it may be difficult for the average private investor.

COLLECTIBLES / ALTERNATIVE INVESTMENTS

Perhaps the most varied and specialised asset class there is. This encompasses anything from fine wine, to art, to antiques and beyond and requires a huge level of knowledge and usually interest to act as a good investment. Like commodities, storage costs present a problem. Huge gains are to be had, but remember, would you want to sell your fine wine collection to realise a profit, or would you rather drink it? Regardless of how you define an ‘asset class’, the important thing is that you (a) hold a variety of significantly different investments that are not highly correlated with each other and also that (b) your diversification within asset classes is to the degree at which the specific investment risk has been eliminated where possible. For example, an individual with a property portfolio of 10 London properties is not well diversified within the asset class. The definition of a well-diversified portfolio is dependent on factors unique to the investor and typically defined by identifying the following: risk tolerance, target terminal wealth and investment horizon (planned holding period), amongst others. So how can one achieve sufficient portfolio diversification by buying across the asset classes? Unless you possess huge knowledge, have plenty of time on your hands to monitor your investments, have sufficient storage capacity and are super-wealthy, it’s nearly impossible. One approach of the regular investor (e.g. saving monthly) or for the investor

with a moderate lump-sum is to look at mutual funds (or the UK term is ‘unit trusts’). These are popular with investors because they offer instant investment diversification. A mutual fund can be a mixture of cash, property, shares, commodities, bonds and collectibles managed by a team of professional investors. The professionals do all of the research for you, including picking and choosing assets that can achieve a desired ratio of risk and growth potential. However, mutual funds have their disadvantages, too. Not all mutual fund managers are created equal, so there’s no guarantee that your collection of stocks and bonds will make money. Also simply purchasing one mutual fund might not give you adequate diversification – numerous mutual funds across asset classes will help aid diversification. For example, investing everything in an oil and energy mutual fund might spread your money over 50 companies, but if energy prices fall, your portfolio will likely suffer. Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. When you buy a mutual fund, you are able to diversify without the numerous commission charges. Imagine if you had to buy the 10–20 shares needed for diversification. The commission charges alone would eat up a good proportion of your savings. Add to this the fact that you would have to pay more transaction fees every time you wanted to modify your portfolio. With mutual funds, you can make transactions on a much larger scale for less money, because there are thousands of others just like you investing money into the same fund. At a time where financial markets are in turmoil and individuals are unsure which way to turn, mutual funds can provide a good way to diversify your investment portfolio and ensure that you ‘don’t put all your eggs in one basket’.

James Norman

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JAMES E. HARRISON Harrison is the Commercial & Finance Officer at Panashco Media, publisher’s of Property Life magazine.

Why invest in property? Well surely it must be all about the money? So the follow-up question is: ‘What sort of money are you looking for? Capital appreciation. This is your long-term savings’ plan.

Rental return. Houses left to on their own crumble to dust eventually, so remember that the rent needs to be high enough to include maintenance and repair (and insurance) costs. Pay for a holiday home. Holiday home? Hmm…not a bad idea. A truly mixed-use solution for the individual is to buy a property somewhere you like to holiday. Not only do your holiday expenses go towards the mortgage instead of someone else’s mortgage, but you can rent it out when you aren’t using it (presuming other people share the same holiday idea as you). Plus, you get a lot of kudos from family and friends for letting them use it for free outside peak rental periods. Ideas for holiday homes include beach houses, city getaways and golf resorts. Avoid taxes. As upstanding citizens, I am sure no one wants to avoid paying his or her taxes! Of course there are more tax-efficient methods

Quick buck. Well let’s recap about the yield:risk ratio – the faster your timescale, the faster your yield; the faster your yield, the higher your risk! Get rich quick schemes, as we all know, usually only make money for the person who sold it to you...

for organising your financial life (otherwise accountants and financial advisors wouldn’t be so rich). This really is a case for seeking advice for the country in which you live, as well as the country in which you intend to buy. Topics of conversation at the very least should include dual taxation, inheritance and capital gains tax.

The righT properTy invesTmenT means securiTy

A popular saying in England goes, ‘It’s as safe as houses.’ It’s a saying that probably gets a Bond-style raised eyebrow these days (but shouldn’t). The bad press comes from the wrong people buying the wrong property, either from greed or true lack of ability to meet a monthly payment schedule. The general idea behind buying an investment property is that, if it’s for rent, the rental payments should hopefully cover more than the borrowing costs. The rental income needs to also cover

the maintenance, repairs, legal fees, insurance and other miscellaneous, sundry costs. Furthermore, the capital appreciation will, over time, pay for the opportunity cost of any down-payment you made plus a small yield to cover the effort and risk involved. Well, that doesn’t sound very exciting. It’s not! But, think of it this way: when everything else falls apart, you own bricks and mortar (well a modern house could be alloy and glass, but it just doesn’t sound quite the same). As your portfolio grows, the risk will lessen and the average yield should rise to a predictable level. With predictability comes planning and the ability to further leverage your income/capital. OK back to the question (really this time): Why invest in property? Invest because it’s security and the ability to leverage capital. As a bonus – it’s also kind of like getting someone else to pay your pension annuity.

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THE

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An elegant address got even more chic

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Every detail is carefully considered. In a home designed for the finest of lifestyles, no effort is spared to indulge you with the ultimate pleasures. Unwind in the private rooftop pool of your penthouse or strata-landed terrace house, rejuvenate yourself in the pampering spa pool, or simply enjoy good company in the residents-only clubhouse. A private lift that opens into your beautiful home provides total privacy and security. Choose the property that suits your lifestyle. Be it a strata-landed terrace house, a penthouse, or a three- or four-bedroom apartment.

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