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Understanding Frontier and Emerging Property Markets: Potential for Investors in Asia

水曜日 , 13 12月 2017 ARTICLES

Making up for over a half of the Global population, it makes perfect sense that the Asian property market has gained the attention of many an investor over the last couple of decades.

The terms emerging and frontier have long been used across the property industry to categorise the level of economic maturity and development that a country has achieved. We take a look at reasons behind the economic potential across the Vietnam and Thailand property sector:

Frontier markets, are simply those that have not yet made their surge towards emerging status due to various reasons such as low income per capita levels. Emerging markets – also known as developing markets - generally refer to those that are currently experiencing rapid economic growth. These markets are often in the process of shifting away from reliance on the export of raw materials to a more mixed economy.

 

Vietnam

It would surprise many that Vietnam still holds its frontier status – despite its rapid growth over the last decade. This points to the fact that there are several boxes that need to be ticked and hurdles that need to be crossed before a nation jumps across one of the tiers.

Known for its bureaucratic nature, the country’s considerable barriers to entry (when it comes to the acquisition of property) is the very thing that is keeping property prices low and attractive to investors. It is commonly believed that property prices in major cities will only go upwards due to a mix of urbanisation as well as rapidly growing population.

 

Thailand

Classified as an emerging country, the appeal of Thailand from a property investor’s perspective is justified for several apparent reasons. The country has a relatively open policy towards foreign investments with the honour of ranking third in the annual ease of doing business (in Southeast Asia) ratings behind Singapore and Malaysia.

Extremely popular among tourists, expats and business owners, Thailand offers a mix of a relatively inexpensive cost of living, a favourable tax structure and high standards of medical services – all factors that investors consider to determine stability before purchasing property.

The nation has also initiated plans for a major strengthening of its infrastructure, with both an inter-city rail network system as well as the Thai-Chinese rail project – two mammoth projects that will boost tourism and the economy exponentially.

Close to the frontier markets of Laos, Cambodia, Vietnam and Myanmar, Thailand has also managed to successfully leverage its geographical location to create mutually beneficial trade relationships with rapidly growing economies. An example of this was seen in the penning of a strategic partnership scheme with Vietnam in May this year, set out to achieve a bilateral trade volume of $20 billion between the two countries by 2020.

It’s only a matter of time before countries like Vietnam reach emerging status and Thailand reaches a developed rating. As they both move rapidly towards increased and sustained economic growth, it is safe to assume that their respective property markets will also follow suit and appreciate considerably.

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