ASEAN's property markets unsteady

ASEAN's property markets unsteady

SINGAPORE (AFP): Southeast Asia's largely overheated property
markets, a key source of the present financial turmoil in the
region, have not bottomed out yet with banks expected to push
their borrowers into selling, analysts said yesterday.

The regional stock market downturn coupled with the currency
meltdown could force banks and other financial institutions to go
after borrowers committed to property purchases, said Christopher
Brown, Singapore chairman of global consultancy Jones Lang
Wootton.

"I think that might occur somewhat sooner, may be towards the
end of this year or next year," Brown said after the company's
media briefing here on the Asian property market.

"You may see some institutions in Thailand, etcetera pushing
for some direction, action, or pushing their borrowers into
selling," he said, adding such action could also be possible in
the Philippines and Malaysia.

Brown said as property cycles in Asia were shorter than those
in developed markets, the region could move out of the bearish
period within a short span of time, especially if investors took
advantage of the lower prices offered.

"The markets here have not dropped to their lowest levels
yet," he said, but added the recovery could be much sooner than
the four years Australia took to see real recovery from the
property downturn in 1990.

Property bubbles have appeared in most of the Southeast Asian
economies, most of whose currencies have eroded sharply against
the U.S. dollar leading to falls in the stock markets mainly
after imposition of capital market controls.

Gaw Seng Suan, associate director with international property
consultancy Richard Ellis Singapore, said the possibility of
banks foreclosing on mortgage loans would arise if the financial
crisis resulted in drastic economic slowdown and further dampens
sentiment.

Gaw said property prices could drop further based on data
collated by the consultancy.

"We do share the view that based on data coming through today,
especially the high levels of unsold and unoccupied properties
will put downward pressure on prices and rentals at a time when
take-up is weakened and sidelined by poor sentiment," Gaw said.

However, he added that once the regional currency crisis blows
over, foreign investors would be more willing to explore
investing in the region's property market to take advantage of
the weak currencies.

Southeast Asia's currency turmoil erupted with the effective
devaluation of the Thai baht after Bangkok faced a plethora of
economic problems, including overexposure of banks to the bloated
property sector and a collapse of real estate prices.

Malaysia, the Philippines, Indonesia and Singapore have also
imposed property curbs to thwart excessive speculation, restrict
property financing and cool down overheated real estate sectors.

A hike in interest rates to check the steep slide in Southeast
Asian currencies had also increased the mortgage repayment burden
for borrowers, analysts said.

Brown said rental rates were falling in Kuala Lumpur,
Singapore, Ho Chi Minh City, Bangkok and Manila, bottoming out in
Tokyo and accelerating in Hong Kong.

He added that more mature markets like Hong Kong and Singapore
would hold firm and remain safe havens for investment.

"Generally the region has sound fundamentals despite the short
term financial market turmoil and weak sentiments," Brown said,
adding it would in a way benefit from a "cooling off" period and
reduction in supply overhang.