Transcript Slide 1

The Asia Opportunity
Nicholas Brooke
President, RICS
Asian Bites - Overview
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Asia’s economies growing strongly, and SARS now
just an unpleasant memory
China and India providing momentum for regional
growth
North and East Asia still outperforming south Asia
although Singapore recovering
Election year - everywhere!
Property markets mixed
Currency and exchange rate concerns
Economic Transformation
Wholesale, Retail,
Import, Export,
Restaurants and
Hotels
Financing,
Insurance, Real
Estate and Business
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300
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Community, Social
and Personal
Services
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Transport, Storage
and Communication
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Manufacturing
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2001
GDP (HK$ bn)
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Year
Hong Kong – Cityscape
Hong Kong
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A vacuum in leadership but recovering
nevertheless
GDP: 5.4-6.2%
Inflation: -0.6%
Rents and prices rising, particularly in luxury
residential sector
Increase in tourism with subsequent spending
helping to lift deflation
Unemployment figures improving
CEPA
India
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The next driver of growth?
GDP: 7.0%
Inflation: 5.0%
Still major challenges in attracting FDI
IT and business services sectors continue to drive
demand for office space – making the most of
highly skilled, English speaking but low cost
workforce
Stable rents/prices due to high supply levels
India
Indonesia
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Precariously poised and still muddling through
GDP: 4.9%
Inflation: 6.5%
Economy improved in late 2003 and interest rates
have fallen
Limited progress in resolving bad debt issues
Property markets showing signs of recovery with
most interest in the retail and luxury residential
sectors
FDI still showing little sign of improving
Indonesia
Japan
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An enigma and a puzzle to most, but moving out
of deflation despite itself
GDP: 1.4%
Inflation: -0.5%
Office sector rents have declined by 30% for new
stock and 15% for existing since early 2001
Economic improvement could lead to increased
employment opportunities
Demographic challenge of ageing population
Japan
Mainland China
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Huge engine of growth domestically and in Asia
GDP: 7-8%
Inflation: 3%
FDI continues at high levels but domestic market
now as important as exports
Olympics 2008, World Expo 2010
Enormous amount of development – risk of
markets overheating
Growing interest in second tier cities
Potential for social unrest, under employment,
shift to the cities
Mainland China - Beijing
Mainland China - Beijing
Mainland China - Shanghai
Malaysia
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Potential dark horse
GDP: 4.4-5.0%
Inflation: 1.8%
Improved utilisation rate in manufacturing capacity
Budgetary deficit still a concern
Office sector in KL performing steadily
Retail sector continues active although with high
levels of supply
Jury still out on new leadership
Malaysia
Philippines
Circumspect scepticism as rich get richer and poor go
nowhere
 GDP: 4.2%
Inflation: 4.5%
 Economy improved in late 2003 but concern over the
upcoming Presidential election in May
 Call centres still main driver of demand in the office sector,
again using low cost, English speaking workforce
 Rents expected to stabilise after 50% decline since 1997
 Concerns over election/succession issues
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Philippines
Singapore
On the mend but not yet out of the woods
GPD: 4.9-5.5%
Inflation: 1.8%
Financial services giving impetus to economy
Office sector remains oversupplied due to weak
demand over recent years
 Take-up of industrial space improved in later 2003
and investment in this sector is active
 Previous over reliance on electronics being
replicated with investment in biotech
 Role as entrepot under threat from Malaysia
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Singapore
South Korea
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The star pupil in the Asia class
GDP: 5.5%
Inflation: 2.8%
Fiscal stimuli have added to recent economic
growth although politics remain an issue
Office sector stable in all three main Seoul markets
with low vacancy rates of 1-3%
Significant investment in hard assets by
international institutional community
US suspended disbelief and investing heavily
South Korea
Taiwan
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Smoke and mirrors or the real thing?
GPD: 4.1-5.4%
Inflation: 0.45%
Government investment in infrastructure driving
expansion
Presidential elections could be disruptive –
reunification still high on the agenda
Residential prices on the rise
Essentially a local play for local players
Taiwan
Thailand
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Leaner and more streetwise but bad habits
continue
GDP: 8%
Inflation: 2.0%
Perception v informed opinion as to whether
recovery for real
PM Taksin has major following but are his policies
sustainable
Office market still oversupplied but rentals slowly
improving
Thailand
INVESTOR PROFILE
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STILL VERY CAUTIOUS AND RISK AVERSE
Essentially IRR driven - 15% +
FOCUS ON CBD OFFICE AND QUALITY
RESIDENTIAL
GROWING INTREST IN SUB-CENTRES around the
Region e.g. Osaka. Incheon, Guangzhou, Ho Chi
Minh City
SPECIALIST PLAYERS, EITHER OPPORTUNISTIC
OR VERY SELECTIVE E.G. RETAIL
INVESTOR PROFILE - CONTD
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CLUB MENTALITY – SAFETY IN NUMBERS
REALISATION OF SIZE AND SCALE OF
OPPORTUNITY
REALITY IS THAT MOST INTERNATIONAL
DEVELOPERS WILL BE OUT-MANOUVERED BY
LOCAL COMPETITION
CHALLENGE OF DEMONSTRATING ADDED VALUE –
LIQUIDITY NOT IN SHORT SUPPLY