SE Asian property market downturn is cyclical: Expert

SE Asian property market downturn is cyclical: Expert

SINGAPORE (AFP): A downturn on property markets in parts of
Southeast Asia is a cyclical phenomenon that will pass when
balance is restored between demand and supply, a regional real-
estate expert said yesterday.

"I think that every real estate market actually undergoes a
cycle," said Christine Lam, director of sales for a regional
property market show to be staged in Singapore by the France-
based Reed Midem Organization.

"It would be unrealistic to expect every real-estate market to
forever appreciate," Lam told reporters, adding that past
experience showed an eventual return to an "appreciating trend"
in property values.

Worries about the property sector, and by implication the
banking sector, have plagued Thailand as well as the Philippines
and Malaysia amid a real-estate glut.

Thailand is battling a financial crisis caused by non-
performing loans extended by finance firms to the property sector
and there have been fears that similar problems could surface
elsewhere in the region.

"In any of the markets in which you see oversupply at the
moment, I don't think you would be able to purchase a piece of
property today for what you paid 10 years ago," Lam said.

"Every market is always going to be a supply and demand
market, and when there is oversupply, housing starts will go down
and the market will eventually balance out," she said.

Analysts blame a long period of high economic growth across
the region which boosted property sector profits and encouraged
developers to take up over-ambitious projects.

The glut resulted because of too much supply coming into the
market at the same time, while demand takes a longer time to
materialize. Oversupply leads to asset price deflation and lowers
rentals.

Banks, meanwhile, have in many cases increased their exposure
to the property sector to high levels.

Property consultancy Jones Lang Wootton said in a recent
report that the outlook for the Southeast Asian markets this year
was "one of caution as they come under the influence of
increasing supply."

Lam said part of the problem may be that the price of new
developments had exceeded the "affording power" of residents.

But she said there was "a lot of potential" in the region,
citing moves to liberalize and deregulate real-estate markets to
attract foreign investments, while stopping short of predicting
when an upturn would begin.

There were "lots of vultures circling around Thailand, looking
at the market," she said.

"There are a lot of investment dollars out there, but buyers
will only go in when they think it is the right timing," Lam
said.

More than 100 companies involved in real-estate are expected
to attend the regional property market show which will be staged
here from September 16 to 18, the organizers said.

Potential investors will meet developers, insurance companies,
pension funds, banks, architects and corporate end-users in the
Asia-Pacific market at the event which will showcase major new
developments.

Projects on show include the new Pudong business development
area in Shanghai, the Bumi Serpong Damai, a new city in Indonesia
near Jakarta, Fort Bonifacio on the outskirts of Manila and the
Taiwan high-speed train project.