I had some feedback from a reader.
"Hi Andrew. Many years ago, I stumbled across your blog on investing and property. I also noticed you lived in Japan for sometime. I quite liked your thinking and analysis....I have family and business commitments in Japan. Currently I'm based in China. I'm looking for an investment property but am thinking Malaysia or Indonesia now. I can afford Australia but its still 40-60% overvalued in my opinion".
Well I think Indonesia is a frontrunner with the Philippines. I prefer the Philippines because:
1. I think its a more trusted 'English' jurisdiction, though condos less reason for concern perhaps if you deal with major developers
2. Visa restrictions - I think foreigner demand like yourself is a big part of any property market, so tight visa restrictions in those countries give the upper hand to the Philippines. You can stay in the Philippines for 18mths before you have to leave. Now, that might not bother you if you are always flying around anyway, but it will impact on demand for property if you are looking for capital growth. It might not preclude Indonesia, since Indonesia might go the same way, however it might convince you to defer that 'Indonesian option'.
3. The Philippines is getting a big boost from remittances - these people work everywhere - relatives abroad
4. The Philippines is big in business-outsourced-process (BPO) market, and increasingly its teaching English as well, as many Chinese, Koreans and others come hear or communicate over the internet for anything from $3-7 per hour.
5. The current Aquino administration has greatly cut corruption, so Western corporations are taking more interest. There is still a lot of government waste, and that will probably remain until the employment slack is absorbed.
6. The Philippines has a loose zoning regime, so if this is not the case in Indonesia, this might impact on people's decisions, but since foreigners' can't buy property unless they are married to a local, this might not help anyone.
Most of these issues favour the Philippines over Indonesia, though I know Indonesia has also lagged...and it has perhaps also made some progress with corruption. Maybe the smog over Singapore says something else....a brush fire out of control :)
Personally though the beaches of islands in Bali probably have more appeal. You might find it comes down to the particular context of the opportunity, i.e. a bottom-up investment decision, taking the view that maybe both places merit consideration. For instance, Bohol in the Philippines is reputed to have good beaches, its close to Cebu, and a Japanese aid organisation is building an international airport there. Such infrastructure development might spell another tourist mecca like Boracay.
As a side note, I think Australia is over-valued in some respects, but that's not to say I think property prices in Australia are going to collapse. I would however argue that:
1. Australia is vulnerable, and Asia is not on fundamentals
2. Asia has more growth upside
3. Business prospects are better in Asia....but its hard to go past Australia as a place to live if you don't mind an American-style fascist government
Andrew Sheldon
NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Applied Critical Thinking, Strategy, Integrity Investments SheldonThinks
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