Property letdown

PETALING JAYA: While China’s property market is making a comeback and prices are recovering from a sharp drop of up to 50% following the global financial crisis, markets in Europe are still struggling.

According to Chinese economist Steven Xu Sitao, this unbalanced and contrasting scenario does not augur well for the world, which is still in the midst of a recession despite the trillions of dollars in stimulus packages that have been pumped into the global economy.

Xu, who is chief representative of China for the Economist Group and director of advisory services for China’s Economist Intelligence Unit, however, cautioned against too much optimism for China as he noted that the needed industry shake-out of his country’s property sector had failed to materialise.

“This may soon precipitate risks of potential bubbles that China has to pay in the years to come,” he said in an e-mail response on China’s property market.

Xu is one of four keynote speakers who will be sharing their views at the FIABCI Malaysia Global Summit 2009 in Kuala Lumpur this Saturday on how interventions by various governments worldwide turned in different results and how property players should react.

The other speakers are Prof Paolo Garonna, director-general of Association of Italian Insurers; Allan Saunderson, founder and managing editor of Property Finance Europe and Property Investor Europe; and Dr Philippa Malmgren, former financial market advisor to the US President.

Garonna, who is former deputy executive secretary of the United Nations Economic Commission for Europe, said the global crisis would not have been so acute and serious in Europe and much of the world had real estate prices remained anchored to fundamentals.

According to Yeow Thit Sang, the organising chairman of the global summit themed Reviving The Economy Through Real Estate Growth, it would be important to study the weaknesses that caused the markets to cave in in the first place and to find solutions to soften the impact of the fallout to the real economy.

“Unless we understand why this recession happened, we won’t be able to get out of it,” he said.

By The Star (by Angie Ng)