The Response of the Property Market to Economic Turmoil in the Asia Pacific as Shown in the UK

Abstract

Property is usually the third main concern of company directors in terms of investment, overheads and questions of economy of scale. Given its importance to the overall economy, it is a topic worthy of consideration and below we provide evidence supporting this contention in the hope that papers will follow dealing with this often neglected topic. The Asian-Pacific, Far Eastern economies, during the recent turmoil, have been misrepresented according to length, depth and country experiencing the downturn. We look at the empirical evidence and find that with the downturn in the Asia Pacific investors have been seeking safer markets in Europe. As Peter Kershaw, the world renown property developer, who built the Petronas Towers in Malaysia noted, property investment is about location but as with construction timing is more important. Timing is everything in economies so dominated by cycles of growth and recession. As the Far Eastern economies found to their detriment, no one ever seems to understand the potential effects of overbuilding with the total mismatch of supply over demand. Once one section of the market starts to fail often all follow the path downwards like lemmings destroying themselves when their population has grown too great. During the economic turmoil in the Far East, investment into European property increased and will continue to do so, as Western Europe is seen as a major region of growth in the coming year. Peter Kershaw predicts that to the middle to the end of 1999 it will be wise to begin investing in property again in the Far East—A sign of a turnaround of fortunes in that region.