Corporate fundamentals in the credit cycle

December 5, 2011 / By  

Whilst the world holds its breath to see if the Euro will survive, corporations continue to look to Asia Pacific as the lead source of future demand. These corporations include both western multinationals and local Asia Pacific firms now looking to be multinational themselves. These corporations need real estate; and their relatively healthy state is one of the drivers behind the good real estate demand that has surprised some in recent quarters.

Within the credit cycle, households and banks continue to repair their balance sheets in many regions, including Europe, Japan and the US. By contrast, corporate fundamentals in these regions appear healthy.

We adapted a neat chart from the recent IMF Global Financial Stability Review which shows the relative positions of the different regions within the credit cycle. The original of the chart is in GFSR.

The adapted chart has been rotated to line up with our latest Jones Lang LaSalle property clock. When viewed together the expansionary mode of corporate fundamentals across the regions helps to provide an explanation of some of the real estate expansion plans we have seen by corporates.

Uncertainty from Europe does present a risk. But for cash rich corporations focusing on domestic Asian demand, the rates of net absorption of property stock and the desire for land for new production facilities, suggests they are building capacity in Asia Pacific to supply demand. That is good news for the long term sustainability of our real estate industry. As corporations are the tenants that generate the income stream in the form of rents, good corporate fundamentals are good news for investors as well.

Notify of

Inline Feedbacks
View all comments
More on '' in 'Asia Pacific'

Talk to us 
about real estate markets.