19 May 2009
Real estate investors see opportunities in Asian markets
By Rachel Kelly, Channel NewsAsia

SINGAPORE: Global real estate investors are looking to tap on to growing opportunities in Asian markets.

Experts speaking at an industry event, Cityscape Asia 2009, in Singapore on Tuesday said China currently offers the most potential.

This is due to a number of good valuations available in the market, and the economy's positive growth outlook.

China's industrial property sector has been hit hard by the global economic downturn, with over 100,000 factories being closed down in 2008. But experts say these properties offer good value as they are now undervalued.

And once these properties are snapped up, re-employment will start to boost commercial and residential real estate sectors.

John Evans, Managing Director, Tractus Asia, said: "In the Asian region, there are opportunities across most of the countries. However, if you look at what's happening with the economies, the only one that is showing significant growth is still China. And while that growth is nowhere near the sort of stated eight per cent that the government said, it is still a healthy three to four per cent.

"With the crisis here, you've seen a decrease in property prices and... a lot of investors are trying to get out of non-performing assets, so you are seeing a lot of opportunities in China. And the real estate sector is one place I will recommend."

Duncan Owen, CEO, Invista Real Estate, said: "Many of our investors that followed us from the UK and into continental Europe are looking increasingly to diversify, and diversify into long-run growth markets. And the mature Asian markets potentially give us just that type of opportunity to deploy capital and get the long-run types of returns that investors are looking for."

But market watchers say not all markets are equally attractive and warn of potential risks in the region.

Despite growing global investor interest in opportunities in the Asian property market, experts say that investors should be wary of the Thai property market as further decreases are expected in the year ahead.

They say prices in the Bangkok residential property market could decrease by some 25 to 30 per cent in the coming year.

Mr Evans said: "One to steer clear right now is Thailand. It is pretty obvious - with political and economic instability, property values will be going down. Foreign direct investment has basically dried up in Thailand.

"My personal opinion is that we are going to see some further political instability. The Thai market tends to lag behind the economy and political situation by at least a year if not 18 months. So I think we are going to see a big decrease, maybe even 25 to 30 per cent in residential property in Bangkok as there is an oversupply and more supply coming online."

But observers also do not rule out future opportunities in the Thai market if the global economy and the Thai political situation begin to stabilise.