It is common for new developments in London to be marketed in Hong Kong before they are locally, so important is the Asian buyer. Greater China is home to the bulk of the buying power, but South East Asia, particularly Singapore, Indonesia and Malaysia are exporting a huge amount of capital to residential markets worldwide.

Asians are buying at all price levels but typically preferring new build apartments in larger cities. Wealthy Asians are often buying property for their own use, but with an eye to investment too. Prime considerations for the second home/investment buyer should be: transport links, safety, culture, language, education (many buy apartments for children attending university overseas), climate as well as tax and regulatory issues.

So where should they be buying next year?

Anglo-Saxon favourites

English is the world’s second language, so Anglophone nations are generally easier to deal with for travelling Asians. The UK, US and Australia also offer excellent schools and universities and the larger cities are diverse and culturally-rich. Cities such as Melbourne, Vancouver, London and San Francisco already have large Asian communities.

However, many of these countries have introduced measures to either restrict or penalise foreign buyers. New Zealand has introduced a widespread ban on foreigners buying property for example and the UK is set to introduce a 1-3% extra Stamp Duty charge for overseas buyers.

Prospects’ top pick for 2019: London might seem counter-intuitive with both an increase in Stamp Duty and Brexit ahead. However, the longer-term prospects for London are still sound. It is the largest financial centre in Europe (alleged rival Frankfurt’s financial services economy actually shrank 2% over the past decade), it offers great culture, education and diversity as well as being the gateway to continental Europe. Short-term weakness in pricing (Savills data show prime residential values fell 4% in the year to June) and currency are likely to benefit Asian buyers.

Closer to home

High prices and foreign ownership penalties are putting some Asian buyers off the Anglo-Saxon gateway cities above, so closer to home makes a lot of sense. Asia’s developing economies will tend to show more house prices growth, although they will also show more instability. Holiday homes in Thailand, Vietnam and Cambodia are increasingly popular, with both Cambodia and Vietnam still offering many undeveloped islands and coastal areas.

Developed Asian cities also offer most of the advantages of Western Cities: English and Mandarin are increasingly widely spoken, transport links are good and they are much safer than US or European cities. The lack of top-ranked schools and universities might put some buyers off, but the education sector is growing.

Prospects’ top pick for 2019: Tokyo is enormously popular with Asian tourists, who flock to the Japanese capital’s parks, temples, restaurants and shops. The city offers safety, great transport and some of the best new mixed-use developments in the world, alongside some of the most intriguing side streets. Japan’s demographic future is rocky, but people continue to move to Tokyo from provincial cities and overseas. For investors, finance is cheap and increasingly available to foreign buyers and Investors are clearly getting the message: Savills data show prime Tokyo residential prices rose 11% in the year to June).

A bit further off the beaten track

More and more Asian buyers are exploring continental Europe cities, where prices are lower than London and the weather is almost invariably better. Asians who visited London first are now looking at Paris or Berlin. European cities score highly in terms of culture, food and lifestyle, especially France, Italy or Spain. The larger European cities have good universities, which increasingly cater to foreign students.

Looking further afield, South America has some wonderful cities but most are blighted by crime and long flight times from Asia. From a lifestyle perspective, the Chilean capital of Santiago offers a lot, but foreign languages, even English, are not widely spoken.

Prospects’ top pick for 2019 is Lisbon (pictured above), which might not seem an obvious choice, but is a small city (the population is a little over 500,000) with fantastic restaurants and culture. Prices are reasonable: a spacious three-bedroom apartment can be had for $500,000 or so. Prices have already begun to rise, up 21% in the 12 months to June. Portugal also offers an easy and relatively inexpensive route to permanent residency and citizenship. For an investment of €500,000 in real estate, Portugal offers a residency visa and the opportunity to get citizenship and an EU passport after six years. Felicidades!

Further reading:
Savills Global Property Search
Savills Portfolio

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Simon Smith