For many Asian real estate markets, 2016 will be a year of uncertainty.

BDO, a global accountancy firm, predicts that 2016 will be a year of volatility for the Asian real estate industry, with rising interest rates in the United States and China's economic downturn stifling the gains made in 2015. Properties for sale in Doha

"2016 will be a year of volatility for the Asian Real Estate industry, with US interest rates and China's economic downturn rocking the positive foundations laid in 2015," says Solly Benaim, BDO's Global Head of Real Estate. However, some doors to opportunity will remain open, especially in non-traditional assets. In 2016, local awareness and a thorough understanding of each market's sector will be critical to unlocking development.

"The Federal Reserve's rise in interest rates is at the top of the watch list," Benaim added, "but the strengthening of the dollar isn't necessarily a negative thing for the real estate market." When interest rates in the United States were at nil, investors looked elsewhere to ensure they got more bang for their buck. India, as well as Asian hub cities like Manila and Bangkok, have seen significant foreign investment. The US investment dollar will now go further in emerging markets, adding some fluidity to the market and contributing to an upturn in the second half of 2016, with Malaysia and Singapore expected to gain. Those willing to put up with lower yields in the short term should expect capital gains on wise investments by the end of 2016."

 

China's Economy Is Slowing

Through the end of 2015, China's slowdown was on the minds of investors and business leaders, and we expect it to be on the minds of those looking at the Asian real estate market in 2016. As money and demand from the People's Republic declines, Singapore will see a flood of properties becoming open.

It will have an effect on the supply side in India, as product price changes lower the cost of construction materials. Lower production costs would only catalyze this potential for investors and developers alike, with affordable housing expected to be a key growth field in 2016.

 

Asset Classes That Aren't Usually Assembled

In a sluggish economy, it's important for buyers to consider the type of property they're searching for as well as the location of that property. The old adage "place, location, location" still holds true, particularly in slower markets. Because of Malaysia's My Second Home (MM2H) scheme, which allows foreign investors to buy multiple residential properties if they meet certain conditions, now is a great time to build a residential portfolio in desirable areas.

 

This pattern is spreading throughout the area. We are advising on a growing number of NTA transactions in India, particularly in the area of affordable or low-cost housing. We expect these to be two main growth areas in 2016, powered by favorable demographics of the expanding Indian Middle Class, although continued population growth will keep the trend of urban consolidation going. This trend, combined with proposals for a Real Estate regulatory body - which does not yet exist - is making India more appealing to investors. However, locals' affordability remains a problem, and the government is lowering interest rates.

 

As businesses and investors plan for the future, we advise them to proceed with caution in Asia. As we enter the first half of 2016, there are pockets of potential amid challenges from the West (US) and East (China), and the region continues to have a positive long-term outlook, with Malaysia consistently ranked among the top 20 countries globally in terms of ease of doing business, according to the World Bank.