Sichuan earthquake map

The Wenchuan earthquake in China’s Sichuan province in May was a major disaster:70,000 people killed, 18,000 missing, 375,000 injured, 5 million people homeless.

China is in the largest orogenic (which means ‘pertaining to deformation of a continental margin to the extent that a mountain range is formed‘ which is how the Himalayas got there) zone on the planet. But according to Hong Kong-based seismologist Dr. Michael Spranger Wenchuan had ‘never been considered high-risk compared to cities near other fault lines.’

After the Wenchuan earthquake, the earthquake risk in China is even higher because of tectonic shifting. The plates of the earth were moved by that earthquake.

The Straits Times in Singapore revealed two government-sponsored earthquake studies are in progress, both by NTU, both trying to find what action should be taken.

The business impact of planning to mitigate, respond to and recover from earthquakes will be significant all over Asia, even if no more earthquakes occur for many years.

Sichuan earthquake.

First of all, insurance companies are very concerned. The might face a tsunami of claims from a big earthquake in one of Asia’s megacities. Which means insurance rates are bound to go. Perhaps by a significant margin.

If building codes are revised to mandate greater resistance to horizontal ground motion (lead dissipators , for example, or lead & rubber bearings), commercial construction costs will increase even more than they have in the last year. Those costs will be passed on to the consumer.

The impact of another series of serious earthquake in Asia will be felt by businesses around the world. The impact of the recent earthquakes seem destined to mean higher property prices in the medium term.
Source: ZDNet Asia

Jones Lang LaSalle

Jones Lang LaSalle Head of Research (Asia Pacific) Dr. Jane Murray said in the report Asia Pacific Property Digest Second Quarter 2008, that ‘The Asia Pacific property markets are entering a correction phase that will continue over the next 12 months at least.’

Jane Murray, however, noted that in contrast to previous cycles, the extent of the downturn is expected to be moderate in most markets in Asia Pacific given the underlying sound fundamentals.

She  pointed out that potential oversupply is becoming an issue in some parts of the region, notably tier I cities in China.

The Jones Lang LaSalle report highlighted that the retail sector has continued to perform well over the first half of the year, with Hong Kong and Shanghai posting the highest rental growth in the region.

However, it said that emergence of more difficult trading conditions, coupled with new supply coming on line in number of markets is likely to result in more moderate rental growth going forward.
Source: Trading Markets

Zhang Xin

Zhang Xin, chief executive, Soho China, one of the mainland’s biggest commercial property developers, said she expects Beijing to announce further measures to loosen its tight control of the property market to avoid a slump.

She said, ‘The property market is very important to China. It accounts for 10% of GDP and affects many other industries such as banks. I don’t think the government will want to see a hard landing.’

China’s property market has seen a significant slowdown this year after the government put in a series of regulations, such as a restriction on mortgage lending, to take the steam out of the sector.

The volume of property transaction fell 36% in Beijing in August, according to Soho China, and dropped by an even bigger degree in Shanghai.

In a move to boost the domestic economy and the property sector, China’s central bank this week cut the country’s benchmark interest rate for the first time in six years.

Zhang Xin said she expected China’s regulators to reveal more policies to rebuild confidence in the property market amid increasing signs of disastisfaction from real estate investors.
Source: Financial Times

China property

A keynote presentation titled ‘US Investors Abroad: Emerging Markets - Friend or Foe?’ at the Cityscape USA conference in the Javits Center brought together a mixed panel of industry experts.

The panel focused on where the opportunity lay for US investors seeking to expand globally. Given that there were not a lot of funds that were willing to go global yet, and that the typical foreign investment came from ‘entrepreneurial capital, opportunistic and private investment.’

China came up as a country in which there was a lot of activity. The situation was summed up as ‘long term — bullish, short term — cautious.’

When the question was posed to list the top investment opportunities in foreign markets, the answer came, ‘China, China, China.’

Dr. Jane Murray, head of Asia Pacific Research and international director at Jones Lang LaSalle said, ‘The growth rates are staggering.’

She did have a few warnings about China, which has seen a lot of ‘overheating’, in her terms, of its real estate market, as of late. The central government put ‘restrictive measures’, she explains, to cool the market down, some of which are monetarily prohibitive, such as forbidding foreign borrowers to be involved in a deal.

She said, ‘China is not an easy place to do deals at this time.’ There are still deals getting done, she explains out, but you have to look more toward development in second tier cities.

More on this HERE.
Source: Globe St.com

Visitors to a real estate show in Xian.

China has joined the United States, Britain, Spain and others on the list of nations suffering a real estate decline.

Although the last national statistics showed single-digit growth from July 2007 to July 2008 in the average price of commercial and residential real estate, real estate brokers say prices are down from peaks reached earlier this year, while the number of transactions has plunged.

This downturn comes as the growth rate of Chinese exports has slowed — sharply in renminbi terms — and stock markets have plummeted.

The confluence of events has resulted in what economists describe as a deceleration in China’s economic growth — although at nearly 10% it is doing better than almost any other nation.

Brokers say that sales volumes first dropped precipitously in southeastern China, and then the decline spread across the country. Faced with few buyers, sellers started cutting their prices for residential and commercial real estate.

In some neighborhoods in the southeast, prices have dropped by 10 to 40%.
Much, much more on this HERE.
Source: New York Times