Property Markets in Asia Will Be Affected by Europe’s New Quantitative Easing.

The European Central Bank (ECB) announced a EUR 1.1 trillion quantitative easing package to support the Eurozone economy over the next 18 months, according to CBRE, and this will have a mixed impact on the APAC real estate market. hotel
CBRE’s Global Chief Economist, Dr. Richard Barkham, tells The World Property Journal, “The decision takes away a lot of the uncertainty around interest rate hikes and currency volatility in the Eurozone. The impact on monetary policy and currency volatility in other parts of the world, however, remains unknown. The ECB’s and Japan’s decision to maintain quantitative easing will make it more difficult for the US to deviate from the trend, implying that a drastic rate hike in the US is improbable, and the near-zero rate era will likely last for some time.
In the medium run, the Eurozone economy’s persistent downturn will cause European occupiers in Asia Pacific to make slower and more cautious corporate real estate decisions. However, Asia Pacific will continue to be a focus for revenue development in the medium to long future, a tendency that will result in an increase in these organizations’ office requirements. Due to sluggish import demand from Eurozone countries, many Asia Pacific exporters may be overcapitalized. This would result in lower demand for industrial facilities and a slowdown in FDI in emerging Asia. Oversupplied markets will be particularly vulnerable.
Due to the widening yield difference, extended low interest rates, and favorable exchange rates, Asian capital will continue to see real estate markets in continental Europe as attractive. Their primary focus will remain on the United Kingdom, particularly London, although interest is expected to spread to key cities in Germany and France. Larger yielding options in markets like Portugal and Italy may appeal to investors with a higher risk appetite.
However, more Asian investors are likely to turn their attention to North America, which has a clearer road to recovery and more powerful government programs to stimulate economic growth, as a result of the ECB announcement. Because the Australian dollar and the Japanese yen continue to weaken and both markets remain hotspots for investors, some organizations will choose to stay in Asia Pacific.
In 2015, European funds are likely to become more active in looking for investment opportunities outside of the Eurozone. Because of their greater economic prospects, many groups will look to the United States and Asia Pacific. Greater China, on the other hand, where the Renminbi has not depreciated against the Euro, may begin to appear more expensive to European investors.”