Asian real estate boom just catching its breath

By Alex Frew McMillan, The International Herald Tribune
Published: December 14, 2006

HONG KONG: As 2006 comes to a close, Asia's property markets, like its economies, are among the strongest in the world. And while growth may be slower in 2007 as a reaction to the U.S. market downturn and the cooling measures taking effect in China, growth is expected nevertheless.

"Asia Pacific remains the strongest growth region worldwide, although performance is likely to slow during 2007 in line with the global economy," the real estate asset management arm of Deutsche Bank, Rreef, said in its Asia Pacific Property Cycle Monitor.

Seventeen successive interest-rate increases have hit home in the United States, with the National Association of Realtors' housing price index going from double-digit price gains in early 2006 to below zero in just four months, the fastest decline ever seen.

The plunge rocked Hong Kong, where the property market is intertwined with its American counterpart because of the currency's peg to the U.S. dollar. "Hong Kong has seen an incredible transformation over the last 18 months, with growth at above 20 percent in 2005 replaced by negative growth now," Liam Bailey, the head of residential research at Knight Frank real estate, wrote in a recent report.

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