The turning economic tide

June 28, 2013 / By  

Over the first half of 2013, we’ve seen some significant changes across Asia Pacific in terms of relative economic performance. The tide has started to turn in different directions for the region’s two biggest economies, China and Japan. China is slowing as its government looks to transition to a consumption-led growth model. Conversely, the government in Japan has succeeded in reigniting its economy after two decades of stagnation. Meanwhile, emerging South East Asia has come up steadily through the economic growth ranks, assisted by a variety of drivers including abundance of natural resources, competitive wages and policy reform.

  • Japan has grabbed much of the limelight in recent months following the huge stimulus program announced by Prime Minister Abe in April. The benefits are already starting to flow through to the real economy. The falling yen has boosted exports and at long last Japanese consumers are starting to spend again. Time will tell whether the positive impacts are permanent, but over the short term we expect to see a boost to the country’s property market. The combination of improving economic growth and cheaper yen-denominated assets should see increased purchases by international investors in what is already the region’s largest investment market.
  • South East Asia’s improved economic performance has been another regional highlight, with top marks to Indonesia for its resilient growth and to the Philippines for its 7.8% y-o-y expansion in Q1, the strongest in the region. Jakarta is now on the radar screen of international real estate investors, while Manila has been one of the few markets to enjoy continued strong leasing demand, much of it underpinned by MNC offshoring and outsourcing activity.
  • In Australia, the mining sector has come off the boil as China has slowed, contributing to the rapid fall of over 10% in the Aussie dollar over the last two months. A sustained currency depreciation will assist the competitiveness of Australia’s exporters including struggling manufacturers. In the property arena, Australia was already high on the list for international investors due to its attractive yields and excellent market transparency. Like Japan, a cheaper currency should help to stimulate further inward investment.

For an overview of the changing economic and property market landscape in Asia Pacific, take a look at our quarterly flagship publication, the AP Property Digest. If you need in-depth property market data and analysis, we offer tailored subscription packages for our industry leading Real Estate Intelligence Service. Our Q2 results are out shortly.

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