One common mistake among foreign investors in Asia is dealing with a no-name real estate developer. This severely limits your ability to attract tenants, generate rental yields, and resell your property later if required.
If you’re investing in a condo or housing community, buying into a project built by a reputable property developer is absolutely crucial.
Why is the developer’s name such an important factor? Well, most other websites will simply tell you how a company with a strong history is more likely to meet their construction deadlines. Or how build quality standards are generally superior if you’re dealing with a decent developer.
Sure, those statements are correct. They’re also obvious facts though, and lack insight to the point of barely able to be considered as proper advice.
Construction standards and timeframes aren’t even the main reasons why choosing a well-known developer is so important. Future resellability, and ease of renting out the property, is arguably worth considering more than the surface-level product.
Below, we’ll show you how to avoid a few common investment mistakes, and explain why developers play a bigger role in Asia’s real estate markets compared to elsewhere in the world.
developers impact rental yields and resale value
See, Asia’s prime real estate markets are very “brand-focused”.
What does that mean? Well, if you’re thinking about buying into a city-center project in one of Asia’s main urban areas, you’re probably looking at a condo or housing community. The majority of these projects are marketed, built, and sold by large property developers.
In most countries, real estate and construction are largely thought of as boring industries. Unlike in other parts of the world though, Asia’s largest property developers have built successful brand names around their projects which encompass all aspects of society.
Asia’s real estate developers are typically among the biggest companies in their respective markets. The billionaire tycoons who own them, although generally unheard of outside the Asia-Pacific region, are renowned locally as business gurus and celebrity CEOs.
Simply put: developing nations often have their own local version of Steve Jobs or Warren Buffett – influential personality types who personify and expand the reach of their company’s brand name.
But in developing nations where domestically-made consumer goods aren’t considered “cool” brands, these businesses are usually involved in property instead of the tech or automobile industries.
You could easily compare the branding of Asia’s top real estate developers to Apple or Nike in terms of local marketing power within their home countries.
Television ads and billboards are absolutely filled with condo advertisements in this part of the world. Regardless of whether we’re talking about Singapore, Bangkok, or Kuala Lumpur, there’s always some “hip” real estate company that develops sleek new buildings.
Young urban professionals in Thailand dream of owning a townhouse built by Sansiri. Or a condo unit developed by Ayala Land in the Philippines. It’s a universal trend across the Asia-Pacific region.
Because of all this, it’s much easier to find prospective buyers and tenants if you have a condo or house with a developer brand name attached to it.
If you’re trying to sell a home built by a reputable developer, it’s like reselling an iPhone… significantly easier than one manufactured by a company nobody has ever heard of.
Seasoned property investors know that selling and renting your asset are often the two hardest parts of the job. Picking the right developer will help you achieve both of those goals.
In short: a developer’s branding is very important. That’s because the reputation of the business that built a property will determine how easy it is to rent it out or resell it in the future.
WHAT MAKES A great PROPERTY DEVELOPER?
Each country in Asia has somewhere between ten and twenty reputable developers. Granted, you’ll have more choice in places like Thailand or Indonesia than in smaller markets.
The best real estate developers in any country tend to share a few similarities though. First off, they’re almost always publicly listed on their respective country’s stock exchange. Put simply: they’re a large enough size where you can trade stock in them.
Publicly listed developers have superior access to financing and a greater degree of public oversight. They’re responsible to long-term shareholders – not just short-term customers.
Second, a good property developer should have at least a dozen completed projects in their portfolio, built to a high-standard with satisfied buyers.
A developer’s past work is important because it helps provide a basis for your expectations. That’s especially true if you’re buying an condo project off-plan, before it’s even finished construction, which is usually the default method in emerging markets like Thailand and the Philippines.
Don’t be afraid to go on a tour of a developer’s past projects. Or to check Google Maps for reviews written by tenants and co-owners about their previously completed buildings.
Residents and visitors often review condos projects online. Ratings can offer insight into both a project’s management standards and build-quality.
Just remember: if you’re investing in a condo or housing project, you aren’t merely buying a physical structure. You’re also making an investment in the reputation of the developer that built it.
Skip the Next Western Recession
Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.