Marco Robinson, a Malaysia-based property entrepreneur cum author has 15 years experience in Asian real estate. He sat down with Post business reporter Don Weinland recently to discuss the current climate of the regional market and what part Cambodia can play in the future of the sector. Robinson will be lecturing on real estate in Phnom Penh this spring.
• What kind of property investments are you recommending to your Asian customers these days? What are the underlying factors for your recommendations?
What you had in the US is a fantastic growth in property in the last 10 years that experienced a sub-prime crisis because of bankers overleveraging and greed in sub-prime mortgages. And of course because the baby boomers have retired and property prices have tumbled. So, now you can buy property that used to be US$250,000 for $50,000. You can’t do that in Cambodia because Cambodia is still growing, while infrastructure in the US is already there. However, there’s not going to be any major developments to invest in. Countries like Cambodia and Vietnam are growth regions where large investments can be made.
What you have in the States, for the first time since the Great Depression in 1929, is the Section 8 Program. What this means is that if you don’t have a job, the government will pay your rent for you. The welfare system will pay your rent 100 per cent. You have to qualify, but it’s fairly easy. Minimum, you have 4 million people unemployed right now in the United States. When you’re an investor, a Section 8 Program is great because the tenant is going to stay in the house because they can’t move, as they don’t have enough money. And if a Section 8 tenant damages your property, they can never claim Section 8 again. Therefore, a Section 8 tenant take better care of your home than a private leaseholder.
Last year, mainland Chinese invested $100 billion in residential property in the US. That’s a staggering amount of money. A lot of Chinese would like to live in the USA. The US government is actually incentivising Asians bring money to and investing in the US. If you invest $500,000 in US property you’re given a visa automatically.
• What kind of property investment opportunities do you see in Cambodia?
Cambodia’s an emerging market. In emerging markets you are going to get more opportunities in terms of making a capital gain in a very short period of time if you have the right development opportunity for people to invest in. In a more developed economy like the US, you don’t have that gain opportunity because it’s already developed.
• What other aspects of Cambodia’s economy seem unique to you?
Some of the things I’ve discovered in terms of finance is that Cambodia is about 50 years behind the West. You can’t go and get personal loan, you can’t get a cheap mortgage, you can’t get a credit card easily, you can’t get a car loan. People are paying for things in cash. That’s very different with the rest of the world and the way the Western world works. Asia is built on savings. And in places like Cambodia, people are realising that cash is better than getting a loan. Cash is giving a better return than anything else right now. In Cambodia you can get 6 per cent in a savings account on a fixed deposit - That’s unbelievable. In England, in the US, even in Malaysia and Singapore, you’re getting 0.5 per cent net after tax. So Cambodia is really a great opportunity for people to grow their cash and invest in the right investments.
• What is your outlook on China’s property this year?
A lot of people think China is going to land hard and crash. We don’t agree with that. China put in property cooling measures in five years ago. China is going to have a soft landing. And if you look at the first and second tier cities like Beijing and Shanghai, property has gone up four, five, six times. But now it’s starting to come down because it was overvalued and went up too fast. You make money in China now by investing in the third tier developing and emerging cities like Changping in Guangdong province. You can buy a property for $30,000 and it will double in a year. I did that last year. And it’s still increasing.
A lot of the middle class are coming to the third-tier town. There’s a huge amount of demand and not enough supply.