ASEAN's property markets unsteady<\/p>\n
SINGAPORE (AFP): Southeast Asia's largely overheated property
\nmarkets, a key source of the present financial turmoil in the
\nregion, have not bottomed out yet with banks expected to push
\ntheir borrowers into selling, analysts said yesterday.<\/p>\n
The regional stock market downturn coupled with the currency
\nmeltdown could force banks and other financial institutions to go
\nafter borrowers committed to property purchases, said Christopher
\nBrown, Singapore chairman of global consultancy Jones Lang
\nWootton.<\/p>\n
"I think that might occur somewhat sooner, may be towards the
\nend of this year or next year," Brown said after the company's
\nmedia briefing here on the Asian property market.<\/p>\n
"You may see some institutions in Thailand, etcetera pushing
\nfor some direction, action, or pushing their borrowers into
\nselling," he said, adding such action could also be possible in
\nthe Philippines and Malaysia.<\/p>\n
Brown said as property cycles in Asia were shorter than those
\nin developed markets, the region could move out of the bearish
\nperiod within a short span of time, especially if investors took
\nadvantage of the lower prices offered.<\/p>\n
"The markets here have not dropped to their lowest levels
\nyet," he said, but added the recovery could be much sooner than
\nthe four years Australia took to see real recovery from the
\nproperty downturn in 1990.<\/p>\n
Property bubbles have appeared in most of the Southeast Asian
\neconomies, most of whose currencies have eroded sharply against
\nthe U.S. dollar leading to falls in the stock markets mainly
\nafter imposition of capital market controls.<\/p>\n
Gaw Seng Suan, associate director with international property
\nconsultancy Richard Ellis Singapore, said the possibility of
\nbanks foreclosing on mortgage loans would arise if the financial
\ncrisis resulted in drastic economic slowdown and further dampens
\nsentiment.<\/p>\n
Gaw said property prices could drop further based on data
\ncollated by the consultancy.<\/p>\n
"We do share the view that based on data coming through today,
\nespecially the high levels of unsold and unoccupied properties
\nwill put downward pressure on prices and rentals at a time when
\ntake-up is weakened and sidelined by poor sentiment," Gaw said.<\/p>\n
However, he added that once the regional currency crisis blows
\nover, foreign investors would be more willing to explore
\ninvesting in the region's property market to take advantage of
\nthe weak currencies.<\/p>\n
Southeast Asia's currency turmoil erupted with the effective
\ndevaluation of the Thai baht after Bangkok faced a plethora of
\neconomic problems, including overexposure of banks to the bloated
\nproperty sector and a collapse of real estate prices.<\/p>\n
Malaysia, the Philippines, Indonesia and Singapore have also
\nimposed property curbs to thwart excessive speculation, restrict
\nproperty financing and cool down overheated real estate sectors.<\/p>\n
A hike in interest rates to check the steep slide in Southeast
\nAsian currencies had also increased the mortgage repayment burden
\nfor borrowers, analysts said.<\/p>\n
Brown said rental rates were falling in Kuala Lumpur,
\nSingapore, Ho Chi Minh City, Bangkok and Manila, bottoming out in
\nTokyo and accelerating in Hong Kong.<\/p>\n
He added that more mature markets like Hong Kong and Singapore
\nwould hold firm and remain safe havens for investment.<\/p>\n
"Generally the region has sound fundamentals despite the short
\nterm financial market turmoil and weak sentiments," Brown said,
\nadding it would in a way benefit from a "cooling off" period and
\nreduction in supply overhang.<\/p>",
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