Property investors bullish on emerging Asia, Latam

Fri Dec 3, 2010 12:57pm EST

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* Double-digit returns seen in emerging Asia, Latam in 2011

* Views mixed on property outlook for Euro zone

By Daryl Loo

LONDON, Dec 3 (Reuters) - Property investors are extremely bullish about the outlook and total returns available in Asia's developing markets and Latin America, preferring their economic growth prospects over those of Europe, a survey said on Friday. About 100 delegates at the annual Thomson Reuters Global Property Outlook conference were asked, in a computer survey, what real estate markets they felt most bullish about in terms of total returns over the next five years.

Developing Asia, home to economic giants China and India, was by far the top pick with 43 percent of the votes, while 18 percent of respondents chose Latin America, the second most popular region.

"When you get into these emerging markets, you are very much buying into the story of the country," Tony McGough, property consultancy DTZ's DTZ.L global head of forecasting & strategy research told the conference

"If you think Brazil or China is going to carry on motoring ahead, then investing in real estate there will give you exposure to that growth as well ... and that is also the risk that you are taking," McGough said.

Asian governments have imposed a raft of measures aimed at preventing their property markets from taking off too quickly, but the region is still seen to offer investors some of the most attractive real estate globally. [ID:nTOE6AN07Z]

Asked about their total returns expectations in 2011 for developing Asia, 76 percent of delegates predicted returns at 10 percent or more, while 53 percent also saw double-digit returns from Asia's developed markets.

When it came to the euro zone, 58 percent of those surveyed saw returns of up to 10 percent in 2011, while the remainder predicted poorer returns.

About 67 percent also expected the European Union would be able to work through the worsening euro zone debt crisis, which has led to concerns that Portugal and Spain may need bailouts after Ireland. [ID:nLDE6B10I4]

In the longer term, however, there is a chance that Europe could run into a similar predication as Japan, which is suffering from the so-called "3-Ds": an ageing demographic, heavy debt and deflation.

"Once you get through the next one or two years, who's to say deflation doesn't kick back into Europe, because the demographics clearly drive it, as well as the need for more savings," Kiran Patel, global head of business development, distribution, research & strategy at AXA Real Estate.

This could still prove positive for property however, Patel argued, as bond yields tend to go down in line with deflation, potentially boosting the attraction of property returns. (Reporting by Daryl Loo; Editing by Andrew Macdonald) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)

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