The economies of Asia remain complex and volatile. Against the general backdrop of economic uncertainty, falling equity markets and the onset of hostilities in Iraq, the SARS crisis led to a slowdown in commercial activity, reduced economic growth and a largely stagnant real estate sector over the first two quarters of 2003. China, Hong Kong and Singapore were particularly affected.
Post-SARS however, the general economic prognosis is positive. With SARS reducing GDP in several countries by 1 to1.5 percent last year, the region is expected to record a growth of around 5 percent in 2004. Reflecting Asia’s role as an economic dynamo in the global arena, this compares with global growth forecasts of 2.5 to 3.0 percent. a Property Valuation Report In the medium term, Asia’s ascendancy in the international economic landscape is set to foster a revision to capital investment flows both within business generally and within the real estate sector.
Whilst Hong Kong remains mired in deflation – with gradual improvement forecast for 2004/5 – its parent China continues to attract the attention of all global commentators. Similarly, in India, outsourcing from the West has been a key driver in strong economic performance. China, driven by manufacturing, and India do indeed look set to become amongst the largest economies in the world in the next decade and beyond. The real estate potential in both is enormous. In the near term, improving signals from Japan bode well for better conditions across the region.
Europe experienced varied economic fortunes in 2003 with the principles and policies of EMU being more severely tested than before. Whereas countries like Spain, Greece and the UK have returned robust economic indicators, Germany, France, The Netherlands and Portugal have struggled with the spectre of recession. This naturally creates varying patterns of local economic prosperity which is in turn reflected in the fortunes of the real estate sector. Demand and rentals are generally down, with the underlying economy making the difference between minor adjustment and downward correction. Looking ahead, economic recovery in Europe is forecast for 2004/5.