Asia retirement idylls may be built on sandSun Jan 13, 2008
By Dominic Whiting
JIMBARAN, Indonesia (Reuters) - Go Daimon is 41 and without a grey hair, but the employee of the Tokyo Stock Exchange dreams only of retirement.
He already knows how it will be paid for -- by "baby boomers", children from a post-war birth spurt now on the cusp of retirement, who will seek villas like the one he snapped up in Bali two years ago.
Now worth more than double the $45,000 he paid, the two-bedroom villa and plunge pool in Bali's only self-proclaimed retirement resort is rented for $70 a night for about two-thirds of the year, mostly to elderly Europeans fleeing the cold.
With the first U.S. baby boomers due to get their first social security checks in February, and rapidly ageing and increasingly affluent populations in many developed nations, several Asian countries are stepping up marketing campaigns to attract investments from retirees.
Asia's lure of cheap living and sun is strong, especially at a time when developed nations fear the surge of retirees will buckle their health and pension systems.
But property experts say investors are taking big risks, although returns can compensate.
Few dream resorts stack up as solid investments for typical second-home buyers, who are in their 50s and keen on some returns in the run-up to retirement.
Daimon gets 65 percent of the income from renting his villa -- the developer takes the rest -- giving him an annual investment return of about 22 percent.
"Right now the profit is so-so, but in the future I expect much more," Daimon said, hoping a new spa and planned Balinese cooking classes will help push up occupancy and rents. "If I'm lucky I'll retire when I'm 55."
LEGAL OBSTACLES
The Thai island of Phuket, with its golf and beaches, has seen land prices in many areas shoot up five-fold in three years.
But although foreigners can own apartments, they must set up firms technically owned by Thai nationals if they want land, a tenuous legal loophole that politicians have been eager to close.
In Bali, villas are usually sold on 25-year renewable leases to skirt a law against foreign ownership. And with seafront villas going for $700,000, rental yields are often low.
"You talk to these people in the finance industry and they dream about having a house on the beach," said Tim Murphy, whose firm Intellectual Property has sourced $200 million worth of property for clients in Hong Kong and Singapore in two years.
"But then suddenly the left side of the brain kicks in, and they worry about rental yields and liquidity," he said. "People are really conflicted about whether to go for the retirement aspect or the investment aspect."
Murphy, a 37-year old former executive at British insurer Prudential and owner of more than 100 properties, said the main requirements for a good investment are secure land title, a liquid market, a favorable tax regime and the ability to borrow against a property to magnify returns.
"Malaysia ticks all the boxes," Murphy said, with Langkawi becoming particularly popular among Middle Eastern investors, while Vietnam is exciting because of its fast economic growth.
But for an off-beat choice, Murphy is touting four-bedroom chalets at the Japanese ski resort of Niseko for $350,000, with a rental yield of 6-7 percent and snow seven months of the year.
Among efforts to lure retirees, the Philippines cut retirement visa fees last year to help attract a million foreign retirees by 2015.
Thailand's "elite card" targets wealthy visitors who might retire in the country. In return for a $30,000 one-off fee, a member receives a lifetime of priority at immigration, golf memberships, health checks and spa treatments.
"We want friends of Thailand to come and to tell their friends it's a great place," said Natthaya Intarasud, head of the firm that runs the scheme, which now has 2,300 members. "If you love us and want to come to live with us, we're happy."
MUCH-ADRMIRED MALAYSIA
But Thailand faces stiff competition from its southern neighbor, whose "Malaysia My Second Home" program has drawn over 11,000 retirees in the last five years. The package includes a 10-year renewable multiple entry visa, tax exemption on pensions and permission to import domestic staff.
Malaysia, which lets foreigners own freehold property, overtook Australia as the most favored foreign retirement destination for Japanese this year, according to a recent survey.
Japan is likely to become a major exporter of retirees as it struggles to support pensioners.
The proportion of its population aged over 65 is expected to double to 40 percent by 2055. But with an average $100,000 in the bank, a Japanese pensioner can buy a two-bedroom apartment in central Kuala Lumpur.
A hip replacement costs $12,000 in Bangkok, compared to $17,000 in Japan, and living in Manila costs about a third of Tokyo.
But high-profile scams could put some retirees off.
In December 2006, six elderly Japanese filed a lawsuit in Tokyo against a firm, saying it had reneged on promises to provide land for homes on the Philippine island of Cebu.
They said they wanted to "sound the alarm" after they paid up to $75,000 for homes with one-on-one health care, but found empty plots, Japanese media reported. When one tried to build a house, he found the consultancy firm had no land titles.
Daimon admitted his investment in Bali "was a kind of gamble", with the villa development just a field of white limestone when he first saw it. "But I trusted the developer and his story, and it paid off," he said.
(Reporting by Dominic Whiting, editing by Anne Marie Roantree & Kim Coghill)
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