There could have been no worse time to hold an expo on the Asian property market this year than this month.
As the impact of the global financial crisis on the region unravels — in the form a slumping stock market, company bankruptcies, steep falls in flat prices, and job cuts — even the most daring of property investors have taken a step back. It was against this backdrop that the Asian version of an international real estate summit held annually in Cannes, France, was held last week in Hong Kong.
The number of exhibitors at the MIPIM Asia conference — developers, banks, architects, hotels and construction firms, mostly from Asia — dropped to 190 from last year’s 236, organizers said.
Visitors were also down to 1,700 from more than 2,100 last year.
During the three days, last Wednesday to last Friday, there were times when the number of people manning the exhibition booths outnumbered visitors.
Despite the lukewarm attendance, however, those who did make it to the expo shared the same enthusiasm for answering the question: Is the Asia market the last bastion of hope for property investment?
“More than ever, we do need this kind of event, our trade delegates really need to communicate in this hard moment,” said Gilles Chaumet, MIPIM Asia director.
As the domestic property markets in the US and Europe are being battered by the credit crunch, many investment groups are starting to preach to their clients about the wisdom of shifting their capital to Asian properties.
“What we will probably see at some stage in early 2009 is that investment committees and fund managers will sit down to look at their asset allocations and say we want to have a certain amount in emerging markets,” said Glenn Maguire, chief Asia economist at Societe Generale in Hong Kong and keynote speaker at the expo.
“I think you will see a reweighting of asset allocation within the emerging market space which is more favorable to Asia, and less favorable to Latin America and Eastern Europe,” he said.
Given that a lot of wealth created over the past decade from the equity market has proved to be worthless, Maguire said, investors will find themselves increasingly attracted to the tangibility of properties.
While Eastern Europe and Latin America both have high exposure to the international banking system, Asia, which is leveraged off China, has generally kept its financial system intact with relatively low borrowing levels, he said.
The resilience of Asian economies under the sub-prime crisis appears to be supported by recent economic data.
An analysis by AME Capital showed that gains made by real estate funds with an Asian mandate dropped to 0.25 percent last year from 33 percent in 2006 — which compares favorably with European and US mandated funds, which posted respective losses of 25 percent and 20 percent last year.
Within Asia, Maguire said he expected economies which have for a long time exported to China, such as Hong Kong, Japan, Taiwan and South Korea, to outperform those which have relied on US consumption, such as Singapore, Malaysia and Thailand.
Despite the downturn, funds targeting Asia have burgeoned in recent months, said Andrew Weir, who looks after property and infrastructure at KPMG China.
Apart from continuing interest from the Middle East, he said, many sovereign funds had maintained high asset allocations to Asian properties “behind the radar screen.”
“The other source of capital coming to the Asian market is what I call ‘unlisted wealth’ — high net-worth individuals in Asia who haven’t been really affected by the stock market situation,” Weir said.
He considered it a “once-in-a-lifetime” opportunity for long-term investment into second-tier Chinese cities such as Chongqing and Wuhan as Beijing recently unveiled economic stimulus packages to boost infrastructure, speed up urbanization and encourage domestic consumption.
“If you have the perspective that China’s long-term demographics and urbanization story is very solid, this is a historic opportunity to get sites in those cities,” he said. “Quite a lot of people think that the next six months is the right time to enter into the market.”
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
RSS