Last updated December 11th, 2021.

We recently posted an article ranking the most expensive cities in Asia to buy property. A list of Asia’s cheapest places to buy real estate, along with the reasons for their low prices, makes a natural follow-up piece.

Here’s a disclaimer though: you shouldn’t buy property (or any other asset) merely because of the fact it’s inexpensive.

Property is sometimes cheap for a reason. Weak future investment prospects are usually priced into the market and can keep real estate values low.

The opposite is also true. Just because a market is expensive doesn’t mean it won’t continue growing in the future. For example, Singapore and Hong Kong are two of the most expensive cities in the world.

Both cities are major global finance hubs with high living standards and limited development space. As such, there’s a solid argument that Singapore real estate remains a good deal… despite costing US$20,000 per square meter (or about US$2,200 per square foot) on average.

Of course, some people called real estate in Singapore and Hong Kong “too expensive” five years ago back when condos in these cities were half the price.

Critics exist today as well. Time will tell whether they’re incorrect this time.

The best strategy is to focus on overall value. Ask yourself if rental yields are high enough and whether there’s potential for appreciation. Smart investors shouldn’t bargain hunt for the sake of it.

With all that said, a few property markets enjoy a rare combination of fair prices and great value. Let’s find out what Asia’s cheapest places to buy real estate can offer you as an investor.

 

3. The Philippines

The Philippines is the third least expensive country for property investors. Purchasing a condo in Manila will set you back by approximately US$3,000 per square meter.

Home prices in the archipelago went on a bull run for the past few years, more than doubling since the turn of the decade. Not many bargains are left though. Current real estate values are way beyond the level where most locals can afford them.

Not only that, but the Philippine property market is overvalued compared with others in the region. Giving just one example, buying a condo in Bangkok will cost you barely US$1,000 more per square meter than Manila on average.

High prices in the Philippines remain, despite Bangkok’s income levels standing at triple the median salary in Manila. 

You only must look at the next country on our list for an even more developed, lower priced market to compare with the Philippines.

Nonetheless, we probably won’t see a real estate collapse in the Philippines anytime in the near future. That’s because the Philippine economy is still among the fastest growing in the entire Southeast Asia region, climbing above 7% year-on-year during the second half of 2021.

Foreign investors, especially buyers from China, India, and neighboring countries in ASEAN should soak up any excess supply in the meantime.

Either way, the Philippine property market (or at the very least the capital of Manila’s) should see modest growth ahead. It’s one case where comparatively low prices don’t necessarily equal a great bargain.

 

2. Malaysia

Property in Malaysia’s capital of Kuala Lumpur costs only about US$2,500 per square meter on average. This is despite Malaysia ranking among Southeast Asia’s richest nations – third wealthiest after Brunei and Singapore.

Why are real estate prices in Malaysia so low? Quite simply, Kuala Lumpur went through a construction boom and now suffers from a heavy buildup of housing inventory.

Rental yields are also horrendous at around 3% net. Therefore, nobody wants to be a landlord in Malaysia. It’s just too much effort and cost for not enough reward.

 

KL has an impressive skyline. Regardless, not enough Malaysians can afford a shiny new condo unit.

 

Malaysia’s Ringgit was one of Asia’s worst performing currencies during the 2010s, declining by nearly 40% since the start of the decade.

Falling commodity prices and weak exports led the currency to reach levels not seen since the 1980s. This means buying property in Malaysia is now cheaper in terms of most foreign currencies.

However, Malaysia’s long-term economic outlook is much better. Its strong population growth will help this relatively small nation of 30 million people rise to 40 million inhabitants before the year 2040.

All these facts, alongside a rising urbanization and greater consumer purchasing power, will inevitably lead to higher demand for prime real estate in Malaysia.

Do you mind waiting awhile for property prices and rental yields to increase? That’s a personal investment decision. Yet Malaysia’s demographic fundamentals show that real estate values in Kuala Lumpur, Penang, and elsewhere will almost surely appreciate in time.

 

1. Cambodia

Cambodia is the least expensive country to purchase real estate as a foreigner in Asia. It costs roughly US$1,000 per square meter to buy prime residential property in the nation’s capital of Phnom Penh.

Mind you, we aren’t talking about new high-rise condominiums in Phnom Penh. Expat-targeted info about real estate in Cambodia focuses on such condos. But they’re often expensive, suffer from high vacancy rates, aren’t popular among local buyers, and have little resale value.

Older shophouse apartments built during Cambodia’s colonial era are some of the best deals in the region though. Their quality can range from fixer-uppers, to buildings with 5-star standards and luxurious fittings.

 

These apartments might be a few decades old. Yet they’re well-built and boast a desirable location in Phnom Penh’s financial centre.

 

Why is Cambodia so inexpensive? Unlike Malaysia, for example, there’s no mismatch between supply and demand. Buying real estate in Cambodia is cheap simply because the nation is one of Asia’s least developed.

It might not be the case for long though. With economic growth exceeding 7% per year (which is only expected to hasten from there), Cambodia is also one of the fastest growing nations on the planet.

Tourist arrivals, foreign investment, and international exports are all on the upswing and often rising by numbers in the double-digit percentage range each year.

Angkor Wat is the world’s largest religious structure, bringing in millions of dollars worth of revenue annually. No other frontier market in the world’s can claim a tourism industry as developed as Cambodia’s.

Meanwhile, foreign real estate investors in Cambodia can benefit from yields in the 7% to 8% range. That’s a rather good incentive to wait.

 

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About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an international stock trader and property investor based in Southeast Asia. Reid manages the world's first frontier market real estate fund and has been featured in publications such as Forbes, Property Report, South China Morning Post, and Seeking Alpha. You can learn more about him here.

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