MIPIM Asia 2011 - Big picture - the macroeconomic outlook for Asian real estate

The outlook for the Asian market is a broadly optimistic one.

That was the main message from the keynote conference session: Macroeconomic Outlook and Key Implications for Asian Real Estate at Mipim Asia 2011.

Facilitated by Francois Ortalo-Magne from the Wisconsin School of Business, the session – against what he called ‘the turmoil of the global economy‘ – featured Global Head of Real Estate Markets for Thomson Reuters Robert Ciemniak and Professor of Economics at the China Center for Economic Research Prof. Yiping Huang.

Huang said that he had found that the further he travelled from China, the more pessimistic people became, with people in London and New York believing a hard landing is inevitable. But can the economy be rebalanced? ‘My answer is I think the economy  the rebalancing is already happening’.

He added that the Chinese economy is likely to see slower but more sustainable growth, higher inflation, and an acceleration of industrial upgrading over the next five years, with a big impact on consumers and investors. A trend which may continue, he said, is that of declining house prices in many of its cities, but there is confidence to be had – many issues are caused by government policies, which can be reversed. India needs to take some of the burden of manufacturing from China for it to press ahead. ‘I don’t think we should worry about a hard landing too much’, he said.

Ciemniak painted a picture both of the bullish outlook and the bearish – the bulls would say that the urbanisation process is still ongoing, with 1 million per month moving to cities, the government is rich and the RMB is still undervalued. The bearish would say, however, that there is a lot of debt in the system, growth is slowing, and the population is ageing. The trick is best summed up in an anecdote. Ciemniak used to play chess – a student approaches a master and asks how many moves ahead he thinks – 5, 10, 20? The Master replies  ‘just one move ahead of my opponent’

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