[photopress:Liew_Mun_Leong.jpg,full,alignright]Global real estate investment is still buoyant but 2007 may be a pivotal year after an extended bull run in property prices.
Future Trends is the key theme at the Reuters Real Estate Summit currently being held in London, New York and Singapore.
Worries over U.S. subprime mortgage loans and Spanish housing, tighter Chinese regulations, cancelled property company flotations, and weak debuts by British real estate investment trusts (REITs) suggests the market is at a turning point.
Peter Hobbs, global head of real estate research at RREEF, said, ‘This year is the same as last year and the year before because people expect property returns to remain strong but to then fall off sharply in the following year. However, there are now more and more signs of that eventual sell-off, and the recent spike in bond yields increases the risk that the slowdown in property performance starts to occur before the end of the year.’
Does this include China?
In China, the government is trying to cool the market with a raft of measures to deter speculation, including taxes and interest rate rises. Perhaps because of this funds are becoming much more cautious.
Some quotations from the conference:
Robert Lie, CEO Investment Management Asia at ING Real Estate, ‘There’s not much room any more for further yield compression. What we’re saying is you cannot just buy anything in any country, and assume values are going up.’
Seek Ngee Huat, President, GIC Real Estate:
‘The Chinese government is clearly concerned about house prices running out of control so they want to rein in speculators. If they can get it corrected, it is good for the market in the long run.’
Liew Mun Leong, President & CEO, CapitaLand and seen above:
‘It is a demand-driven market in China. People are buying it with their own money, they are staying or buying for the purpose of rental yields. The government is not discouraging foreign investors per se but is seeking to ensure supply of real estate for urbanization. It also wants to stabilize prices so the common man can afford housing.’
Kurt Roeloffs, Asia Pacific Chief Executive for RReef:
‘We have very high expectations of what we can accomplish in the long-term in China. There’s lots of policy changes and bumps on the road a long the way, but in generally it’s all headed in the right direction. So we see increasing scope for strategy. . . The government tries to communicate as best they can in advance policy changes. We’ve been able to adapt to it. I don’t think they’re being unfair. They’ve got a macro economic challenge they’re doing reasonably well at managing..