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Opportunistic investors pull back from Asian property
Opportunistic investors are pulling back from Asian property because they see more scope for picking up distressed assets in the United States and Europe, and loans are harder to get in Japan, one of their favourite markets.
Hedge funds have stopped dabbling in property in the region, fund managers say. And although private equity players will continue to develop property in India and China, they are more likely to buy buildings cheap in the West than in Asia.
“Six months ago it was quite straight forward, we didn’t have to answer questions about why to invest in Asia,” Guy Cawthra, Asia fund strategist at Morley Fund Managers, told a recent conference in Hong Kong.
“Now investors say ’we might not want to invest in Asia, we want to invest in Europe, the UK and the U.S.’.”
In the wake of the 1997-98 economic crisis, Asia, in particular Japan and South Korea, drew a raft of investment from funds run by the likes of Morgan Stanley, General Electric and private equity firms such as Carlyle Group.
Many made fat profits on a revival by Asian property markets, which are now mostly strong because of a shortage of new supply and still buoyant economies.
Researchers at consultants Jones Lang LaSalle forecast Tokyo office prices will steady this year after a 28 per cent jump in 2007, while Seoul, Hong Kong and Singapore and Shanghai are still on the up. Better opportunities now lie elsewhere for investors. — Reuters
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