Emerging markets forecast down

Emerging property markets may not see as much growth as anticipated next year as food and fuel costs adds to the financial woes of would be investors, according to the latest analysis.

In the US and Europe many consumers, already financially stretched by the credit crunch, are being further hit by rising domestic bills.

This means investment in developing overseas property markets is likely to fall significantly, according to Yukiko Omura, executive vice president with the World Bank's Multilateral Investment Guarantee Agency.

Its analysis indicates that MIGA investment into emerging market economies will drop to some $600 billion (£300 billion) in 2009. This is down from a peak of $1 trillion last year.

The Association of International Property Professionals (AIPP) also predicts a downfall. Its International Property Market Report 2007 found 30-35 per cent of the money spent on overseas property is in emerging markets so a decrease in investment will inevitably hit these areas.

Others in the industry agree. 'Such significantly reduced levels of investment will obviously have an effect on global prices, not least because liquidity, after all, will always affect the fundamentals of what makes a good property market in terms of investment,' said Emma Holifield, of analysts Property Frontiers.

Generally emerging markets are categorised by three stages of development - a period of rapid price growth, followed by months of stabilisation and then more modest, but sustainable, price rises.

Bucharest and Sofia are still in 'the early stages of the first phase' and buyers should consider them because of this, according to Neil Lewis of Property Secrets. The Czech and Slovak capitals of Prague and Bratislava have now entered the second phase, and represent 'solid investments'.

Simon Walker from Off Plan Property recommended that anyone trying to identify emerging property markets should pay attention to countries that are attracting investment from large financial institutions.

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