GIC says sub-prime crisis beginning to hurt Asian property markets

The US sub-prime crisis has begun to hurt Asian property markets, the real estate investment arm of the Government of Singapore Investment Corporation (GIC) said at the FT Asia Property Summit on Thursday.

While Wall Street starts picking up the pieces from the sub-prime crisis, GIC said, the Asian property market has just started to feel the impact.

The investor added the fallout would be even greater if the US went into a full-blown recession.

Seek Ngee Huat, president of GIC Real Estate, said: “The contagion effects of the sub-prime crisis can potentially put a downward spin (on) the current cycle. While the sub-prime crisis may be seen essentially as a transatlantic problem, its ripple effects are certainly being felt here in Asia.”

GIC, however, remained upbeat, saying that the sub-prime meltdown presents not just threats but also opportunities.

It noted that Asia will continue to be the growth region of the future, attracting foreign investors in search of higher returns and diversification, as emerging cities in China and India move aggressively to become first-tier cities in the world in 10 to 20 years.

Mr Seek said: “It, therefore, may make sense to take some short-term risk in order to position for the long term, for many of these institutional investors. In fact, if one takes a long view, the pricing in emerging markets, which is starting from a low base, should have tremendous upside.”

GIC Real Estate has some 300 investments spread across 30 countries around the world. – CNA/ac

Source : Channel NewsAsia – 15 May 2008

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