Stephen Atherton, vice president and managing director of NAI Asia Pacific, noted that political instability in Southeast Asia is posing formidable obstacles to investors. Indonesia's president is facing impeachment, as is the newly elected prime minister of Thailand, the president of the Philippines was recently ousted and the country is facing assaults by Muslim extremists. Malaysia and Singapore face problems as well.

That unrest has led investors to seek refuge to the north in China, Japan and Taiwan. Over 80% of the mergers and acquisitions in Asia last year took place in northern Asia, more than a third of them in Japan. The huge Chinese population and the wealthy consumers of its northern neighbors are proving much more attractive to business than the political turmoil of Southeast Asia.

Across the pond, the European property markets experienced strong rental grow in 2002, says David Perry, vp and managing director of NAI Europe. Class A office space in Paris and Madrid grew by 40% last year while vacancy rates in many European cities remained at near 2%. Unlike the 1980s, class A space is tight, so that even a steep decline in demand will not produce a high oversupply like that seen in the early 90s.