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Monday, April 7, 2008

Asian property offers attractive returns

SINGAPORE: Asian property offers attractive returns even as the US housing market enters what may be a prolonged slump, Hong Kong-based Intellectual Property Global Ltd said.

US foreclosures rose 60 per cent in February after surging to a record in the fourth quarter of 2007, and that could worsen a decline that started last year, said Tim Murphy, managing director of IP Global, a real estate advisory firm. Assets in emerging markets such as Asia offer a safer bet, Murphy said last Thursday in an interview in Hong Kong.

"I think the majority of Asia sits very well," Murphy said. "Wage inflation is still pretty good and interest rates are not too scary."

Sales of existing homes in the US fell from a record annual pace of 7.08 million in 2005 to 5.65 million last year, according to Fannie Mae, the largest US mortgage buyer. Median home prices could extend declines as the number of unsold properties builds up and prospective buyers stay away.

"I think it's here to stay now," Murphy said of the US housing decline.

Vietnam is his favourite market in Asia, he said. Only 5 per cent of the population is taking out a mortgage, meaning there is large potential for growth.

By Bloomberg

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