12/12/2009
LONDON, Dec 11, 2009
Property investors are most bullish about developing Asian markets next year, as concerns of a second pricing dip across debt-drenched mature markets crimp returns expectations in 2010, an exclusive Thomson Reuters survey showed.
Some 85 percent of the 150-strong audience at the annual Thomson Reuters Global Property Outlook said they expected developing Asian markets like China to deliver total returns in excess of 10 percent next year as economic growth feeds demand for homes, shops and offices.
By contrast, just 13 percent of those delegates surveyed said UK or U.S. 2010 total property returns would match those seen in developing Asia, even though both markets looked to be nearing the twilight of their real estate corrections.
61 percent of the audience said they expected UK total returns between zero and 10 percent next year, broadly in line with Eurozone total property returns for the same period.
Around half of respondents expected to see the same zero-to-10 percent total returns range in developed Asian markets like Korea and Tokyo as government measures to thwart real estate bubbles bear fruit.
Thin transaction volumes and unclear changes in pricing have damaged sentiment towards the U.S. property market, where the volume of distressed property hit $140 billion by end-October, Real Capital Analytics data shows.
A narrow majority of 42 percent estimated U.S. total property returns between minus 10 percent and zero, while 39 percent of those surveyed expected returns between zero and 10 percent.
Congested credit markets and a reluctance among some banks to lend to real estate has encouraged bargain-hunters to delay investment sprees, and 61 percent of respondents said they expected a "flat" property market next year.
There was less conviction on the topic of Dubai, illustrating continued fear among property investors that the worst global real estate slump for generations was not over yet.
Around half the respondents said they believed Dubai's debt crisis was a sign of further troubles to come for highly-leveraged property markets, while 37 percent said the problems were too small to spark a calamity outside the Gulf region.
Until valuations stabilise further and banks resolve massive exposures to distressed property loans, real estate will have to compete strongly to maintain its weighting in a diversified portfolio, the survey results indicated.
Stocks was the preferred asset class among the survey respondents, with 33 percent expecting shares to perform best in 2010, versus 28 percent picking property and 26 percent selecting commodities.
