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South East Asia property market likely to weather the global downturn

South East Asia's property markets are not immune but they are more likely to be resilient to the US subprime crisis and knock-on financial meltdown, it is claimed.

'No one can get off scot free from what's happening because global liquidity has been reduced and also the feel-good factor has gone,' said David Simister, chairman of real estate company CB Richard Ellis Thailand.

'It will certainly create a slowdown and a market where for the next 18 months it's a bad time to be selling something but I don't see a situation where there will be a big slide in prices,' he added.

Analysts believe that the 1997 Asian crisis forced regional banks to tighten up their lending practices to the property sector and, with the exception of Vietnam; most Southeast Asian countries have not experienced the same real estate booms witnessed in Asia's rising giants China and India.

These two factors mean Southeast Asian banks, which were reeling with non-performing loans to the property sector after 1997, are in relatively good shape.

'I think Southeast Asian banks are even less exposed to property than Northeast Asian banks,' said Peter Tebutt, senior director of financial institutions at Fitch Ratings in Hong Kong.

In places like Phuket property is continuing to sell well, especially at the high end of the market. Foreign property investors are still showing a lot of interest. 'There's a lot of Middle Eastern money that wants to spread into new emerging markets. Vietnam is seen as less difficult than China, and less complex and frustrating than India,' said David Blackall if Vina Capital, a property manager in Vietnam.

In the Philippines real estate developers are focusing on affordable housing and condominium projects to address the demand for the country's most active buyers, the millions of overseas Filipino workers, said Mike Mabutol, a director for CB Richard Ellis Philippines.

'The sector of the market that is dependent on mortgaging the family residence and using the difference to buy a property in a resort is going to be affected,' said Simon Landy, managing director of Primo Company, a property agent in Thailand.

In Indonesia, where the government is actively supporting the property sector, developers have joined with local banks to offer interest rate subsidies to buyers. 'With credit interest rates subsidy to consumers, it's expected to help improve buyer power and maintain the property market,' said Teguh Satria, chairman of the Indonesian Real Estate Association.

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