|Vietnam’s property market is thirsty for advice|
Yoshihiro Yamaguchi, executive fellow of the Research Institute of Construction and Economy of Japan, said the issues were key factors for developing sustainable real estate urbanisation.
“While the global recession has had an impact on all industries, the real estate and construction industries have been particularly hard hit and issues related to financial resources have been highlighted in any country,” Yamaguchi said.
Japan’s building construction and urban development markets in an effort to achieve sustainable urbanisation, according to Yamaguchi, were pursuing activities focused on the priorities of the environment and low-carbon output, adaptation to the aging of society, and disaster management.
“The real estate and construction industries are discovering new construction methods derived from these three priorities, especially in maintenance, repairs, and renovation work,” he said.
In the area of financing, in Japan, real estate capital for urban development has been procured on the basis of a specific company’s own credibility, profitability, and ability to provide collateral.
“This is called corporate financing. Funding comes from bank borrowing, stock issuance, corporate bond issuance, and loans from various types of financial institutions,” Yamaguchi said.
Apart from that, private developers and construction companies in Japan also largely procure capital from the stock market, as well as from loans from private banks. New loans have fallen sharply since the onset of the global recession.
Meanwhile, the Indian Construction Industry Development Council’s Deepak Mazumdar said the Reserve Bank of India had revised the norms for urban cooperative banks for giving loans to the housing and real estate segment.
“Now, urban banks can use up to 15 per cent of deposits to provide housing, real estate and loans. Earlier, the Reserve Bank of India norm permitted them to use up to 15 per cent of deposits for giving advances to housing loans and other block capital loans.
Meanwhile, Malaysia’s AmanahRaya REIT Managers director Abas A Jalil said that in order to raise real estate funds, the Real Estate Investment Trust (REIT) must be highly appreciated.
“REIT can be one of the very exciting instruments for the purpose of cumulating income generating assets.
“REITs are the public face of a very capital-intensive industry that requires substantial levels of financing,” Jalil said.
According to Jalil, REITs had raised billions in capital through secondary offerings, and they are using it mainly to reduce their debt, recapitalise their balance sheets and position themselves for growth.
“They will develop new opportunities, acquire more properties into their portfolio and to some countries, jointly develop property projects. This will provide even a higher potential return compared to other risk investment instruments,” he emphasied.
Apart from that, as equities are high risk to some extent, bonds are relatively moderate return but without asset revaluation opportunity, investing in property directly will require high investment fund and it is difficult to manage.
“REIT will be a good choice as alternative asset class for investment,” he added.