Friday Asia Digest – IMF Confirms Asian Cooldown


IMF Leads “Muted Recovery” Week

Indonesia, Malaysia, the Philippines, Thailand and Vietnam, which together are known as the “Asean 5”, have had their growth forecasts slightly reduced by the IMF‘s latest report, published this week. This report reflects ongoing global concerns regarding shrinking growth in China – and particularly India, which is having it’s slowest year in just over a decade, as the Chicago Tribune reports this week. And while economists are cautiously optimistic about Asia’s forecasted economic recovery, expected towards the end of this year – India is still considered to be “in the red”, with the Rupee at all-times lows against the US dollar.

Taiwan & Korea, who also largely rely on European and USA exports, have been experiencing a similar cooldown (not quite a recession, but not looking all that good), reducing the red-hot interest in the region that seems to have premated the last few months of Asian outlooks – probably not a bad sign all in all, as some extra cautious & reflective meditation seems to be the ticket wherever one may purchase these days.

Japan Rides Again

Japan’s economic growth forecast, on the other hand, was upgraded by the very same IMF report, reflecting intensifying foreign interest in the Japanese RE market, where equity is predicted to grow, following the first positive signs in over two decades – a fact which reflected in two consecutive days of NIKKEI stock market up trends. An all but un-noticed announcement from Prologis, a leading REIT, has also strengthened the view that Japan’s the place to be at the moment – Prologis just signed a successful lease agreement with an un-named foreign client, for their latest 5 developements in Osaka – essentially commerce & distribution centres, situated in close proximity to the bustling Japanese metropolis’ international port. These reports add to moves this year by some of the world’s biggest names (Goldman Sachs, TPG, Fortress and more), all jumping on the Japanese Real Estate bandwagon, injecting billions of dollars into the country’s economy, still struggling with the aftermath of last year’s Tsunami, Earthquake, and subsequent nuclear disaster.

Hong-Kong and Singapore, both previously displaying signs of a slowdown, seem to be picking up again, with sales volumes in Hong-Kong and average prices in Singapore steadily rising – a fact which most believe signals a healthy, although contracted economy, as reflected in both countries’ first two quarterly reports this year – both showing a large increase in real-estate investment activity.

General opinion seems to be that Asia is no longer as shielded and immune to the effects of the economical turmoil felt in other parts of the world – a fact reflecting in gloomy speculation and cooldown forecasts for west and central Asia’s realty markets. The outlook for south-east Asia, however, remains positive, with the region expected to spear-head Asian recovery and herald continued growth, as mentioned, by the end of 2012.

Real Estate AsiaGlobal Gossip

* Asians buying into commercial hotels and resorts in Australia, as an alternative to dwindling returns in Europe and the US. A 30% drop from 2007-8 values in Sydney and the Gold-Coast (pictured on right), where a belated and minimized version of the global financial crisis hit in 2009, mean that foreign investors are flocking into the two resort destinations, now officially rendered “buyers’ markets”.

* Japanese investors purchasing in Vietnam – which, while considered relatively unstable, seems to be drawing foreign investments for a few years now.

* China RE prices still rising, in 25 of 70 key cities sampled, in spite of government attempts to cool down the market. Further curbs are expected, as lead economists warn that relying on property development to boost the economy is a recipe for disaster.

* In Jakarta, Indonesia, a sharp rise in the number of skyscrapers built – almost double 2009 figures – also points at an accelrating RE industry, but here, too, experts warn against the forming of a potential property price bubble.


(Sources – “Chicago Tribune“, “ZACKS Investment Research“, “Live Trading News“, “The Australian“, “Singapore News“, “Business Week“, “The New York Times“, “Yahoo – Finance“)

(Pic 1 – Map of Asia / Cea, Pic 2 – Gold Coast, Australia / The Bee Keeper)

About Author

Ziv Magen

Ziv Magen (G+) is an Australian, and has been living alternately in Japan and Australia for the past decade. "Born and bred" an IT project manager, he has made the transition to full-time real-estate investing several years ago, and subsequently opened a buyers' and proxy agency - assisting others in remotely capitalising on Asia's booming property market.

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