Market Trends

While the overall prognosis for the Asian market is positive, Asia represents a number of economies in varying stages of recovery. Japan is viewed by many as the economic driver for the region and, therefore, has the potential to substantively impact the other Asian market economies. Following is brief overview of Japanese real estate market trends and current events, provided by Masafumi Kawahara, of the National Federation of Real Estate Transaction Associations (NFRETA).

Trend	Description/Impact
Implementation of the Disposal of Bad Loans	· Newly formed agency mandating banks to unload nonperforming loans to meet capital-adequacy rations · Banks failing to meet guidelines risk damages to credibility in international markets; public funding can be withheld
The Beginning of Real Estate Securitization	· Laws enacted to support real estate securitization · Changes in banks' lending policies creating need for fund-raising through securitization · Securitization will expand number of market investors
Housing Starts Show Positive Growth	· Government demand-boosting policies have resulted in lowering mortgage rates to record-low levels and introduction of housing tax cuts · Proportion of residential investments against GDP is 6.1% (second to Germany's 6.5%); 1999 showed GDP and housing investment growth, as well as positive growth in housing starts (after double-digit negative growth in '97 and '98) · Decline in land prices has moderated
Real Estate Information Network System (REINS)-The Japanese version of an MLS system.	· Many real estate companies have web sites and are putting listings online; increased popularity of linking among web sites and e-mail communication · Internet version launched August '99

The 1999 NAR convention was the scene of a series of global forecasts focusing on the major world regions of the Americas, Europe and Asia/Pacific. Nearly two dozen speakers provided updates on their respective national economies and real estate markets, and forecasts for the coming decade. Overall, much of the world is seeing positive economic indicators, and many regions where recession and financial crisis were expected, such as Latin America, have avoided serious downturns. The Asian economic recovery was one of the most positive stories. Speakers from Indonesia, Japan, Malaysia, New Zealand, Australia and Singapore provided information on the subject. Patrick Liew, CIPS, representing the Institute of Estate Agents (Singapore), gave attendees with a synopsis of his paper entitled "The Asian Recovery: Opportunities and Challenges." The full synopsis as well as a full list of speakers is available at the CIPS Network Web site, www.cipsnetwork.com. Click Global Forecast Sessions under International News. Session papers will be posted here, as they become available electronically. Following are portions of the Liew synopsis. The Asian crisis sent shock waves across the globe. Its causes, conduct and consequences have been well analyzed and documented. As a result of the crisis and the ongoing recovery, there are unprecedented opportunities, which should not be overlooked by astute investors who are keen to maximize their returns in property investments. For investors who are considering investing in Asia, there is one question that begs to be answered, 'Is the Asian economic growth a miracle or a mirage?' In my personal opinion, the answer is 'none of the above.' The strong growth of East Asian economies is not due to any unnatural causes but factors that can be rationalized by and are compatible with fundamental economic theories. The past three decades of achievement in sustained industrialization and economic development, unprecedented in history, are also not a myth but a fact. From 1965 to 1995, the contribution of the ten economies in East Asia to the world economy grew from 9 percent to 25 percent. This contribution is almost on par with North America and the European Union, which contributed 25 percent and 29 percent respectively. The gloomy outlook of the past two years has been replaced by renewed optimism with major analysts predicting better-than-expected economic results. The economic recovery is underpinned by, among others, increasing competitive advantage, easing of monetary policies, and a stabilizing of normal exchange rates. The common denominator among the East Asian economies is that the trade balance has improved; with many of them reflected by a current account surplus and rising international reserves and, thus providing much needed liquidity in the economy. Industrial productivity is turning around and the painful process of economic restructuring, including recapitalization of banks, is in the process. The lowing of interest rates and the corresponding decrease in business costs created the breathing space for the economy and enterprises to consolidate and engineer their growth again. The recovery track is uneven and differentiated with Singapore leading the turnaround, followed by Thailand and South Korea. South Korea's GDP achieved an impressive growth of 7.3 percent in the first six months of 1999 and its output expanded by 9.8 percent year-on-year. Even Malaysia is beginning to show signs of recovery. In a poll of 10 research houses in October 1999 by Rueters, Malaysia's GNP is forecasted to grow by 4.8 percent in 1999 year-on-year and 5.7 percent in 2000. As we scan the horizon, the Asian crisis has resulted in many positive outcomes. There is a greater urgency to benchmark economic policies and structures so as to enhance the comparative advantage in the global market. The demand for sound corporate governance has increased, with greater emphasis on innovative and productivity improvement skills for the knowledge-based era. Unhealthy and protective barriers are being dismantled. All these factors will position Asian nations to compete more effectively in the globalized economy." Patrick Liew, CIPS, is the Executive Director of the HSR Property Group in Singapore. Mr. Liew holds an MBA from Henley/Brunel University, and has written training manuals on Business Management and Marketing, and is co-author of the best selling book, S-Files: Stories Behind Their Success. He can be contacted at apexhsr@pacific.net.sg.

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