The global economic downturn has not been enough to significantly challenge the growing demographic and middle class expansion in emerging Asia, which continues to fuel consumer appetites in places such as China and India. While retail property values have declined in even developed countries, such as Japan and Australia, investment opportunities exist alongside new retail trends and ways to increase existing value.
From the Current Issue
China’s regional cuisines offer great insight into the variety on offer in the regional property markets. Aficionados and frequent travelers to China will know the variety of food on offer, and the spice and delicate flavors in the residential markets are similar. A couple of years ago, investors had difficulty distinguishing between the regions, a virtual guessing game of where best to make money. The answer was to spread it around and hope for the best. Little thought was given to how to avoid the current downturn that the cannier recognized as being just around the corner, presaged by a flood of foreign money.
Economic statistics coming out of Asia do not make pleasant reading nowadays. Faced with a fall in export demand as recession hits many Western economies, Asia has begun to experience an economic slowdown as well. Depending on the degree of their trade and financial linkages with the rest of the world, some Asian economies are even forecast to contract in 2009. With real estate market dynamics closely intertwined with economic growth and credit availability, capital values and rentals in many Asian property markets have softened. Overall, the signs are not encouraging for Asia and its real estate markets. Should one therefore stay away from Asian real estate? The answer is no. Past experience has shown that troubled times present investors with great opportunities .
Charles “Chas” Freeman Jr. served as U.S. Ambassador to Saudi Arabia from 1989 to 1992 and until recently served as president of the Middle East Policy Council. He is chairman of Projects International, a three-decade-old global business development firm. Ambassador Freeman was the U.S. Assistant Secretary of Defense for International Security Affairs from 1993 to 1994, earning the highest public service awards of the Department of Defense for his roles in designing a NATO-centered post–Cold War European security system and in re-establishing defense and military relations with China. Ambassador Freeman recently spoke with Geoffrey Dohrmann, president and CEO of Institutional Real Estate, Inc., about global relationships and diplomacy in times of financial crisis and war.
In late March, I attended an annual conference of the China Commercial Real Estate Association. While other conferences in Asia have been struggling to get attendees, this meeting attracted more than 400 participants. There was a lot of enthusiasm, a prize award ceremony, and it didn’t feel as though the Chinese economy has lost its steam and the property markets have been in decline for some time.