The results of the 2008 Asian Property Survey launched today at the Asian Property Conference by PricewaterhouseCoopers (PwC) and Amárach Consulting confirms Asia as a real land of opportunity. Many of Irish property investors who are already there reported their intention to invest more money in the region over the coming year - according to the survey. Over half of the survey participants expect property investment in Asia to provide Irish investors with higher returns compared to other international regions including Ireland. Top countries identified for investment are China and India. As expected, survey respondents expressed mixed views on the Irish economy with half expecting the Irish economy go grow somewhere between 1 and 2%. Overall, while negative sentiments continue, the degree of negativity has reduced slightly compared to our survey three months ago.
Key findings from the survey included:
Asia
- One fifth of survey respondents said they were already involved in property activity in Asia, with half of these saying they would invest more money;
- More than half (56%)of survey respondents said that Asian property investment will provide Irish investors with higher returns compared to other international regions including Ireland;
- The single key driver for this increased anticipated investment is primarily due to potential significant economic growth (52%) in the region. The greatest potential for this growth is expected to be in commercial and office accomodation, according to survey participants;
- One of the major obstacles to investment is the different legal and regulatory systems (34%).
- China and India are top countries in the region for investment;
Irish Property
- Surprisingly, more than half (58%) of respondents indicated that they would be prepared to invest the same or more in property in Ireland over the coming 12 months compared to the last 12 months;
- Just over half (52%) of survey respondents expect Irish commercial property values to stay the same or fall.
- Nearly three quarters (70%) of respondents expect residential property values to fall;
- For residential property values, a third (34%) of survey participants expect a decline of 4% or more.
- Trends are similiar when compared to the PwC/Amárach Research Property survey carried out some three months ago. However, respondents are slighly more upbeat particularly where residential property values are concerned.
Irish economy
- Continued mixed sentiments on the Irish economy but views slightly more upbeat compared to three months ago;
- One third expect improvement, while nearly half expect disimprovement in the overall business climate over the next 12 months;
- Half of survey participants expect Ireland's economy to grow somewhere in the region of 1-2% over the next 12 months;
- An overwhelming majority (78%) said that the credit crunch was having an impact on their ability to fund investments with over a third (38%) saying this was having a significant or very significant impact.
Speaking about the survey results, Michael McLoughlin, Chief Executive, Amárach Research said:
"In the future, the real challenge for the Irish market will be how to compete against the Asian markets for investment and resources."
Speaking at the survey launch, Tim O'Rahilly, Partner, PwC Real Estate Practice, said:
"These findings confirm that property investors see significant opportunities for investment in the Asian markets. Investors believe that Asia offers positive potential investment returns due to the rapid growth in the Asian economies and positive demographic trends. This is in line with the findings of a recent PwC global survey which projects that China will overtake the US to become the world's largest economy by around 2025."
Nicola Quinn, Senior Tax Manager, PwC Real Estate Practice, added :
" There are significant challenges when considering investment in the Asian markets. The very different tax, legal and regulatory systems as well as the culture mean that investing in Asia is a very different proposition to investing in Ireland and Europe. Investors who are considering property investment in Asia need to do their homework and structure their investments carefully to limit their risks and maximise their returns."
Detailed findings are:
Asia
One fifth of survey respondents said they are already involved in property activity in Asia with half of these reporting their intention to invest more money in Asia over the coming year. The key driver for this increased anticipated investment is primarily due to potential significant economic growth (52%. The greatest potential for this growth is cited to be in commercial (58%) followed by growth in office accomodation (32%).
The top countries in Asia for growth potential, according to survey respondents, are China for commercial property (62%) development and India for residential property development (52%).
The major obstacles to property development in Asia according to survey respondents are the different legal and regulatory systems (34%) with attitudes to banks and availability of finance being a close second key obstacle (24%).
The survey confirms general positive sentiments about the Asian market for property development opportunities with half or more than half of survey respondents agreeing that Asian investment funds and private equity investments will continue to provide steady year-on-year returns for the next 5-10 years. Overall, more than half (56%) of survey respondents agreed that Asian property investment will provide Irish investors with higher returns on investment than other international regions including Ireland.
Property in Ireland
As expected there were mixed views on growth in property values for both Irish commercial and residential property, with more pessimistic views for residential. Surprisingly, just over half (52%) of survey respondents expect Irish commercial property values to stay the same or fall. A third (32%) expected growth of up to 3%. On the residential side, nearly three quarters (70%) expect negative growth with one third (34%) expecting this decline to be 4% or more. These trends are similiar to our January 2008 survey - although respondents are more upbeat when looking at the severity of residential property declines, for example, fewer people expected these declines to be more than 4% when compared to 3 months ago.
Survey respondents reported the greatest activity to be in commercial (38%) and public sector contracts (38%) over the next 12 months.
Surprisingly, more than half (58%) of respondents indicated that they would be prepared to invest the same or more in property in Ireland over the coming 12 months compared to the last 12 months. Of those who are investing in property abroad two thirds (66%) said they expect to continue to invest the same or more abroad.
Views on the Irish economy
As expected respondents continue to have mixed views on the overall business climate in Ireland. For example nearly a third (32%) said there would be an improvement while nearly half (48%) anticipating a disimprovement - of which 12% said they expected significant disimprovement. Nearly half (48%) of survey respondents said they rated Ireland as a supportive place to do business with nearly one fifth (16%) rating Ireland as a very supportive place to do business. Nearly a third (30%) rated Ireland as a slightly difficult or difficult place to do business. Half of survey respondents felt that Ireland's economy would grow between 1 and 2% over the next 12 months with a third (32%) expecting this would be greater than 2%. One tenth of survey respondents however expected negative growth. However, it is encouraging to see that when compared to our last PwC/Amárach Research Property survey carried out in January 2008, respondents in general are slightly less less negative than they were three months ago.
When asked about the impact of the credit crunch, not surprisingly, an overwhelming majority (78%) said it had an impact on their ability to fund investments with over a third (38%) saying this was having a significant or very significant impact.
PricewaterhouseCoopers has achieved first place in the Best Companies to Work for 2008.
About the Survey
The survey was carried out in April 2008 having amongst leading Irish property developers, investors and other stakeholders having over 50 participants.
About the Conference:
The Asia Property Conference takes place on Tuesday, 29 April 2008 at the College of Physicians, No. 6 Kildare Street, Dublin 2. The Asian Property Conference takes place on Tuesday, 29 April at the College of Physicians, No 6, Kildare Street, Dublin 2. This is a key opportunity for property developers, investors and financial advisors to discuss and debate the challenges and opportunities of doing business and investing in Asia. The conference is a half day event finishing with lunch and commences at 9.00am.
Conference Chair: Guy Hollis, Managing Director, CBRE
Speakers include:
John Bruder, Treasury Holdings
Timothy O'Rahilly, Partner, PwC Real Estate Practice
Nicola Quinn, Tax Senior Manager, PwC Real Estate Practice
John Rockett, Managing Director, AIB Private Banking
Heny Mahtani, founder Kayel (Asian property developer)
