Capital values across Asia Pacific will fall by as much as 20% in 2009 as the international financial meltdown continues to spread, according to ING Real Estate’s global research head.
Tim Bellman told delegates this morning at the Global Investment Club in London, organised by Property Week Global, that capital values in the region’s biggest property markets Japan and Australia, could fall by 19.8% and 19.1% respectively, mirroring a predicted decline in global economic activity next year.
He said Singapore would fall by 13.7%, Hong Kong by 12%, Korea by 7.2% and China by 4.9%. He also said there would be ‘rental corrections’ experienced in all of Asia Pacific’s markets.
‘I don’t think anyone knows how long this financial challenge will last but what we do know is that it will be a seismic recession,’ he said.
But he said this will bring opportunities for investors in the region.
He said while un-geared internal rates of return in the more mature Pacific Ocean markets of the region have historically been on average 9%, investors may be able to achieve returns of 13% today. He said, investors in mainland Asia could achieve returns of 15% or more.
‘The long-term economy is a great one,’ he said. ‘Asia has a four billion population and these people are just starting to [become consumers]. Some investors over the next couple of years will make ridiculous amounts of money.’