I attended the APREA Property Leaders Forum 2014 in Hong Kong held by the Asia Pacific Real Estate Association. The forum focused on whether this will be the Asian century.
The second day of the conference started with the keynote interview: Asia and the Global Economy. Lorraine Hahn, former CNN presenter and international journalist, interviewed Patrick Chovanec, managing director and chief strategist at Silvercrest Asset Management and Yu Yongding, an academic and senior fellow with the Chinese Academy of Social Sciences, who previously served as director-general of the CASS Institute of World Economics and Politics.
The discussion started with global issues, and Chovanec pointed to strengthening consumption in Europe and Asia. This was somewhat counterintuitive, given the fact that the credit crunch in Europe has not been fully resolved. But he quoted data suggesting an increase in consumer spending and a slow improvement in consumer sentiment. The United States was praised for its growth in productivity, low energy costs and subsequent steady, though slow, growth.
Both Chovanec and Yu were less positive when the discussion turned to China. Yu said China will face a painful readjustment as it badly needs to change from its current investment-driven economy to a consumer consumption–driven model. As for the investment environment in China, Chovanec predicted that when people make investments based on the government’s promise that there is no risk, rather than on economic factors, there will be many unpleasant surprises. His forecast is supported by several recent defaults by Chinese companies, the first in recent Chinese history.
Additionally, there was a rather important announcement at the end of the conference. If you have not heard already, Peter Mitchell, CEO of APREA for many years, will be stepping down. Peter Verwer, CEO of the Property Council of Australia, will become APREA’s new CEO, starting in July.
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Alex Eidlin is managing director – Asia Pacific of Institutional Real Estate, Inc.
