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.
"Cautious optimism" are the bywords of the moment, according to Perry. While there is anxiety about what impact a downturn in the market may have, there is confidence that the formation of a single European market and the expansion of corporations and retailers across national borders will boost domestic markets.
Closer to home, Canada seems worthy of the interest of international investors, but it receives little attention from the US, says Brian French, vp and managing director of NAI Canada. For example, part of the problem facing Toronto, he says, is that a few building owners dominate the market and no local firms appear interested in challenging them. Class A space in Downtown Toronto is fully leased, but no Canadian developers have shown an interest in expanding the supply. French suggest that any development may have to come from "friendly, ambitious colleagues to the south." He notes that when Donald Trump's visited Toronto recently to announce the construction of his new Ritz hotel he was treated like a movie star.
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