Markbericht Asien Apr08

At the onset of the subprime mortgage crisis in the spring of 2007, few would have predicted that it would develop into a broader global financial market storm.

Executive Summary

• Asian real estate markets remained fundamentally sound in the first quarter, although sentiment has turned cautious, primarily because of the global credit crunch. Property market activity slowed in the quarter, but should rebound because equity capital is abundant.
  
• While the slowdown in the global economy will dampen growth in Asia in 2008, projections are only slightly below the historical average of the past five years.
  
• With oil, commodity and food prices up sharply across the region, keeping inflation at bay will be a major challenge for the central banks in Asia this year.
  
• The turmoil in the global financial markets continues to exact a heavy toll on the public debt markets, including the CMBS market. Reflecting investor concerns, the credit risk premium has widened dramatically since June 2007.
  
• The region’s class-A office markets continued to perform well in the first quarter, underpinned by limited supply and low vacancy rates. However, banks are lending less aggressively, creating refinancing issues even for credit-worthy borrowers.
  
• Asia’s retail markets remained resilient in the quarter, supported by improving household income and firm labor markets. That said, the specter of inflation looms over consumer spending power going forward.