Asian property: reaching ever higher

A SUPPLEMENT TO EUROMONEY/DECEMBER 1996

Supply and foreign demand

Foreign companies are driving top-end property prices ever higher. But will underlying demand keep pace with development plans? Gill Baker reports on the property markets of Asia

The ebb and flow of foreign confidence in Asian countries has had a dramatic affect on demand for Asian property. While domestic fortunes will always constitute the core of underlying demand for property, it is overseas players which are driving the top end of the market.

Hong Kong remains the powerhouse of Asia's property markets and the 1997 hand-over to China was well and truly factored into the market a long time ago. Hong Kong's success looks set to spill into mainland China's property market, with massive growth forecast in office supply. In China foreigners are propping up the commercial and top-end residential market in the key centres of Shanghai, Beijing and Guangzhou.

But restrictions in a number of Asian countries on foreign ownership of property have kept most foreigners firmly in the leasehold and rented end of both the residential and commercial markets.

Where market regulations are more liberal, foreign commercial demand for business property has led to growing investment from developers, often from neighbouring Asian countries.