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No-Risk Investing in Asia After Natural Disasters

Jun 13, 2008
Watching the news recently, you could be forgiven for thinking that the entire country of China is a pile of shoddily constructed rubble, filled with wailing citizens, and that Burma is a whole country literally flattened, with people unable to work and an economy unable to grow at all. However, the facts are quite different - although they might not make for good news stories! In reality, investors in Asia are unlikely to be put off by these natural disasters, being much more balanced in their view of the region than journalists are, and realizing that long-term prospects for the region are better than ever.

Places like Tokyo and Seoul are tipped as being the places to invest in, where the markets still have at least as far to climb again as they already have, according to Mark Callendar, head of international property research at Schroders. Callendar also tipped Hong Kong and Singapore as being close to their peak - great for short term investments in the near future, but less promising over 2009.

ING Real Estate is another company that agrees with this sentiment, saying that it does not expect investment or demand to be severely affected by the natural disasters in Asia recently. Mid tier residential housing in Chengdu and Chongqing provinces is tipped to be on track again as soon as Sichuan province returns to normality, with a natural slowdown immediately following the quake to be expected.

Thailand is another Asian country that is looking rosy for investors, with a great economic start to 2008. The first quarter growth for Thailand was six percent up on the same period last year, and up close to six percent even on the quarter it followed. The new government in the region seems to be settling down, and this is making Asian property management that much more attractive in Thailand. Koh Samui and Koh Phangan will be hotspots for Asian property investors in 2008, according to Liam Bailey, head of international research at DSR. However, investing in Thailand can be tricky for foreign entities - strict ownership criteria put in place by the government mean that local firms must be engaged for buying real estate.

Some analysts have accounted for the effect of the sub-prime crisis in America on Asian property investment and management. Experts such as Jones Lang LaSalle, an international property consultant, have noted that markets that appear to have peaked (such as Tokyo and some Australian markets) will experience slower growth in 2008 than they did in 2007. The slowdown in these peaked markets will create a lowering of the overall transaction volume, but this natural rise and fall of markets has had much more impact on growth than the relatively minor (in economic terms) natural disasters in Asia.

Some experts have also gone to great pains to point out that even the acknowledged sub-prime crisis in America has been overstated in terms of its effects on Asian property management. Darren Styles, CE of the Brooklands Group, says that 'Much of the negativity about the effect of the credit crunch n the overseas market has been exaggerated. It's a tribute to the ... resilience of the overseas property market'. He is still being approached by many people in the UK interested in buying Asian property.

Don't let the exaggerated media coverage of natural disasters stop you from making a profit on Asian property investing and economies which are set to boom in 2008.
About the Author
Gregory Smyth is an independent author providing assessment and comments on leading International Property Consultants in Asia and Greater China , especially CB Richard Ellis.
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