Investors flocking to emerging Asian markets are offsetting government property cooling measures, as debt-ridden developed markets like Europe slump. While real estate returns may not be as strong in 2011, Asia’s expanding workforce, growing middle-class and increased urbanization all bode well for the future. See the following article from Property Wire for more on this.
Asian governments have imposed a raft of measures aimed at preventing their property markets from taking off too quickly, but the region still offers investors some of the most prospective real estate globally, it is claimed.
Property prices in Asia have doubled in many cases in the past two years. So after various measures to take the heat out of markets, especially in China and Hong Kong, it is almost inevitable that returns will cool next year.
But beyond that, price growth should pick up once again off the back of Asia’s traditional attractions for real estate investors; enviable economic growth, a steady rise in currency values and importantly, increasing urbanization in several countries, according to analysts who see prices rising again by between 5 and 10% in 2012.
There is no sign yet of a slowdown in capital coming into the Asia property markets. Indeed, investment is speeding up, figures from property services firm CB Richard Ellis show. That in part reflects the surge in capital flooding into the region as investors turn their backs on the uncertainties of developed countries to lock in gains from fast growing Asia.
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In the first three quarters of 2010, direct real estate investments in Asia totaled $46 billion, double the amount in the same period in 2009, said CBRE, which has an extensive network in the region.
In the third quarter alone, investment jumped 53% from the second quarter, a stark contrast to Europe, where investment fell 6%. About 17% of Asia’s total investment in the third quarter came from outside the domestic markets, up from 14% in the previous quarter.
According to CBRE’s executive director Andrew Ness full year investments will exceed $60 billion, up sharply from $37.8 billion last year.‘It’s still a very much Asian led rebound. The Americans and Europeans are beginning to come in and inquiring more,’ Ness said.
However, with regulators increasingly clamping down on property markets to prevent bubbles forming, such as with tighter lending requirements for property purchases, the 2011 investment climate looks less certain.
But over the longer term, Asian markets offer less uncertainty than the United States or Europe, which will support the market, many analysts say. Beyond next year, the economies of developed nations are expected to grow only sluggishly in coming years as they deal with the heavy debt loads built up during the financial crisis.
One investor looking to lock into Asia’s relatively brighter prospects is British property firm Grosvenor, which manages the estate of the Duke of Westminster. ‘We’re gradually putting more capital into the region,’ said the firm’s chief executive, Mark Preston.
One of the biggest long term Asian attractions for property investors is the rapid pace of urbanization in many countries, which is also a significant contributor to economic growth.
In China, for example, the urban population is 46.6% of the total 1.3 billion population, but is expected to cross the 50% mark in the next few years as between 13 million and 19 million people migrate to cities each year.
Several countries have a growing workforce. In India, for example, the workforce is expected to expand by 270 million people in the next 20 years. China’s working population is due to peak in 2015.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.