Global property investment funds not ‘worried’ by natural disasters in Asia

The risks of investing in Asia have been brought into focus by the earthquake in China and cyclone in Burma. But international property fund managers say concerns about such natural disasters are not likely to put anybody off.

That is because the long term prospects for investment in the region are so promising, according to Mark Callendar, head of international property research at Schroders.

'I can't imagine the latest events are going to put a major halt on Asian property transaction volumes or the level of cross-border investment into the region.

Long-term, the opportunities are still there. Markets like Hong Kong and Singapore might look close to their peak, but places like Tokyo and Seoul are only halfway up,' he said.

The latest figures available from property services firm Cushman & Wakefield show that Asian commercial-property transaction volumes rocketed 27% to US$145-billion in 2007, on the back of an 87% rise in foreign investment to US$73-billion.

China was one of the world's top 10 markets for deal volumes last year, leapfrogging more mature markets such as Hong Kong and Singapore for the first time, the data showed.

Cushman & Wakefield said investment volumes were expected to rise again this year, as global funds ramped up allocations to the region.

ING Real Estate, one of the world's biggest property fund managers, and a leading player in China's burgeoning residential market, said it did not expect international investment or domestic occupational demand to be severely affected.

'We see no reason for a decline in the strong demand for mid-tier residential housing in both the Chengdu and Chongqing provinces and in China as a whole,' said Richard van den Berg, ING's Chinese country manager.

'Some slowdown is expected in the immediate aftermath, but we expect that the sales momentum will recover when Sichuan Province returns to normality,' he added.

Andrew Jackson, Standard Life Investments property fund manager, said property team members did weigh the prevalence of natural disasters when assessing an area, but such studies had limited bearing on investment decisions.

'We are aware of the risks and there are certain areas we would be cautious about investing in because of vulnerability to cyclones, quakes or flooding,' Mr. Jackson said, adding that efforts to pin down new opportunities for its global property funds would not be undermined by the catastrophes.