Of all the real estate agents I have met over the years, Alastair Hughes, Jones Lang LaSalle’s CEO for Asia-Pacific, appears the most forthright and best informed about fast changing events reshaping global markets.
Confessing that “even the experts have difficulty in predicting what would happen in the next six months”, he fears that that uncertainty may have become the norm.
In a sea of gloom, Asia remains the bright spot, he says. The region is in a better position to do business as demand for goods and services continue to be high.
As the euro-zone teeters towards a break up and Washington frets about a third round of quantitative easing, Asians are generally more upbeat about the future.
As for property prices, Thailand’s modest rentals should do a bit better than before.
Jones Lang forecast a 2 per cent rise for Bangkok rentals in the fourth quarter.
Bangkok’s average rents are about US$180 (Bt5,400) per metre per annum, somewhat lower down the ladder than Hong Kong, which ranks at the top with about $2,000.
But if something is cheap, it is cheap for a good reason.
The oddball political scene in past years has not helped.
Above all, Hughes says, it is the ease of doing business that counts most for investors.
In Hong Kong, buyers and sellers can conclude and complete a property transaction worth billions of dollars in a day, or two at most.
In places like Bangkok or Jakarta, that could take many months.
“Bangkok is a relatively cheap place to do business”, he says, “but it still has a way to go to match Hong Kong and Singapore”.
Of Scottish origins, Hughes says the two former British territories have benefited from adopting international business practices.
“Transparency, fairness as well as the fundamental protection of private property is key”, he says.
The Kingdom can improve these key areas if it wishes to be taken seriously by global players who are extremely risk averse.
Today, the outlook has turned brighter as Thailand possesses a much better trained workforce in the financial sector.
They fully understand such reforms can drive international commerce.
“With the change in government, we hope Thailand will continue to provide the kind of support investors are looking for”, he says.
Hughes says it is all about infrastructure. While Bangkok’s masstransit infrastructure has greatly benefited the country, a corresponding financial infrastructure can turn Bangkok into a more attractive hub for business.
While Thailand shines, the outlook for other Asian markets is mixed, he says.
Japan, once the darling of property punters, should see a drop of 5 per cent in rentals.
“The earthquake, tsunami and nuclear disaster has set back Japan”, Hughes offers. “At the same time, there is concern about its ageing population and challenges facing its export economy”.
In China, Shanghai should rise 18 per cent while Beijing could top 22 per cent.
India is equally buoyant with Delhi rising 7 per cent while Mumbai climbs 8 per cent.
Sinagpore could surge 20 per cent as Kuala Lumpur dips 1 per cent.
He remained reserved about the emerging markets of Indochina. They have further to go before they can attract major players.
Vietnam’s difficulties in getting its house in order with the several rounds of devaluation of its local currency and Cambodia’s disposition of having a stock markete that does not trade stocks, can be trying for businessmen.
In the United States, he says the influence of the Tea Party movement cannot be underestimated. Often vilified by its opponents in the Democratic camp, the Tea movement is mainly about fiscal discipline.
Having just joined Congress, it is the only group that cannot be blamed for the debt crisis and fiscal imbalance from bloated overspending.
Hughes is correct in that the climate in the US can have a profound impact on Asia. Failure to get its house in order can hurt the region.
But the positive signs coming from the debt-ceiling clash and the Standard & Poor’s downgrade of US debt, have forced more people to address fundamental problems linked to using the US dollar as the lunchpin of the global monetary order.
On that note, one can be hopeful that pushed to the brink, sound minds will prevail and measures to tackle key issues would emerge, restoring confidence and trust.
Source: The Nation