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SPECIAL REPORT | OWNERSHIP 68 Owning it - The Minority Report Bill Barnett, founder and managing director of hospitality and property consulting firm C9 Hotelworks, negotiates the ownership maze in South East Asia. There is no shortage of real estate products for lower income earners and of course for sale in South East Asia but buying stemming speculative external investment and owning are two entirely different in order to ensure market stability. Painful things, be it homes, villas, condominiums, memories from 1997’s Asian contagion vacation ownership (formerly known as are being erased from the collective hearts timeshare), fractions, destination clubs or and minds of central governments, and as any hybrid of the above. Within the region, demonstrated during the global financial foreign property ownership remains a crises (GFC), which saw Asia lead the contentious topic at best with emotional recovery, things are changing. issues ranging from national sovereignty, Looking at bright and progressive concerns over keeping housing affordable Singapore, which I often draw parallels | JUNE 2011 SPECIAL REPORT | OWNERSHIP with the California-like Orange County of far as extend this onto qualifying foreign Resorts and Ho Kwon Ping’s Banyan Tree Asia. While some may knock it, as we in investors. Wider changes, however, remain Resorts are good examples of two groups the region have come to understand and in the wind in Southeast Asia’s largest tapping into the synergies between hotel and appreciate, the place simply works. It’s all so economy. lifestyle property investment. Consumer bright shiny and new that I need to put on my Of course there continues to be the ability legislation in Southeast Asia often mimics Ray Bans just thinking about it, in order not to lease homes or villas to foreigners, mainly a team trailing at halftime, who are to be permanently blinded. for resort properties in the region. Varieties attempting to stage a late minute come In the Lion Republic, ownership falls of schemes are on offer, from the legally back – but in most counties consumer laws under the Residential Property Act and correct down to a gray area of nominees and are progressing, especially over the wider comes in two servings per se. For non- offshore holding companies. Let’s just say vacation ownership programs. restricted projects such as apartments and where there is a will there is a way. While some say Asia has no country for condos, which have been approved by the With ownership often comes the desire old men, property reforms in the emerging Planning Act, it’s fairly straight forward. of expatriates to leverage their property markets of Cambodia and Vietnam are There is also a process for purchasing and consider in-time resale. It remains moving swiftly when it comes to fast restricted property that requires approval far easier for local banks to take a view tracking these reforms to attract foreign by the Ministry of Law, but that is far too on securitization of assets on a freehold real estate investors. If you are considering complicated to lay out in this article. property versus a leasehold, and also if a property purchase, go back to the time Taking the Singapore example into other selling down to a local is in your sights, they when you were young and taught to wait, countries, places such as Thailand and the will most likely only look at a full ownership look and listen before crossing the road. Do Philippines also allow freehold ownership opportunity. After all, why shouldn’t they be your homework, view the options. Carefully of condominiums, but as an underlying allowed to own in their own country? planned and informed decisions could make 69 fundamental, the allocation of allowed As you move into alternative ownership, all the difference in the often confusing ownership is a minority of the total number things simply get more complicated. While marketplace. of units. So the good news is, you can own fractional ownership in the west can often outright, but the bad news is in most cases come through a deeded interest or right of Bill Barnett is a leading hospitality sector this is restricted to high rise projects and not use, in many cases, restrictions on foreign expert in the region, he writes for various individual homes or villas. Indeed, having ownership or the lack of appropriate publications including his own news site lived in Asia for some 25 years I’m used to legal structure has created a potpourri of thephuketinsider.com being a minority, though I must admit some offerings. The use of leasehold terms or Sharing the lux angst over that Tom Cruise movie. membership rights in many cases create Malaysia introduced one of the region’s an overlay. Add onto that, in some cases, Hong Kong-based company LUXLife offers leading incentives through its MM2H (try the addition of an offshore element in travellers all the comforts of home combined remembering that) or easier Malaysia My which shares are denominated in an SPV with 5-star service and resort facilities in Second Home program. Mainly targeting (special purpose vehicle) which isolates an exclusive villas set around South East Asia and beyond. Rather than spending on vacations, the retirement or second home segments, ownership interest and attempts to create a members can invest in these luxury properties depending on your age grouping, a transparent financial investment. and gain access to a variety of prestigious minimum bank balance needs to be retained There remain successes, failures and services and products such as private islands, in a local bank, after which a connected a slew of mystic combinations when it yachts, jets or country clubs. visa and real estate ownership scheme are comes to shared ownership structures in “For less than the price of a mere down payment on just one luxury multimillion dollar allowed. There are variations from state the region. Fairly said though, a number home, now you can have them all,” said LUXLife to state, but some fairly nifty bells and of quality organizations such as Marriott founder Gary A. Ferraro. whistles such as import tax free purchase Vacation Club International, Karma Four different types of memberships are of autos, visas for domestic helpers, and tax Resorts and Laguna Phuket have a strong available: equity-based memberships, non- exemption apply. track record of reliable operations. More equity based memberships, leisure/travel memberships and exchange memberships. Indonesia has historically presented fairly and more hospitality groups now apply the All feature lifetime access to the company’s high hurdles for foreign property purchases, crossover opportunity of a club or vacation portfolio of villas. but a sign of the times was the recent ownership structure that has shifted from As most villas are in branded resorts, change which allowed foreigners who are time-based to reward points to fill vacant members can use any facilities there without married to national’s permanent residency hotel rooms. Hotels remain a perishable actually staying at the resort. Current options include sea-side villas, eco-retreats, mountain visas. The new legislation has been widely and incremental revenue stream that estates or city apartments in locations such as hailed for liberalising what has thus far enhances the bottom line. Bali, Phuket, Singapore and Vietnam. been a restricted arena and even gone so Bill Heinecke’s Anantara Hotels and www.luxlife.hk JUNE 2011 |.

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