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The first half of 2008 has been rather bleak for global markets, according to Standard & Poor, the value of global stock markets fell by US$3 trillion in June.¹ Oil and food prices are fueling inflation; oil closed at another peak of US$144.14 a barrel in July putting pressure on consuming economies and effectively making them poorer. The credit crunch has tightened the wallets of populations, primarily in the USA and UK. Reduced lending results in decreased spending and in many cases the forced selling of properties to help pay off loans.

Markets less reliant on credit continue to grow albeit at a slower pace than witnessed in 2007. According to the EIU, the aggregate output for the Asia Pacific region excluding Japan is still expected to expand at a strong pace of 6.9% in 2008, only slightly lower than the 7.1% pace projected in January and almost three times the growth of the global economy.²

The following market snapshots provide a brief overview of what is going on in global property markets:

Brazil - Brazil's economy is growing at its fastest pace since 2004 and since President Lula de Silva took office in January 2003 Brazilian exports have tripled. In May this year Standard & Poors (S&P) revised Brazil's credit rating to BB+, making way to increased investment in the Brazilian credit market and allowing the government to raise finances in increasingly competitive terms.³

Samuel Zell, chief executive of Chicago Tribune and Chairman and President of Equity Group Investments LLC, believes Brazil ticks all the right boxes for an informed investment decision, and has the chance to be a "bigger economic power than China" 30 years from now.⁴

Panama - Panama's investment fundamentals remain strong. A stable political environment and the 2nd biggest Free Trade Zone in the world after Hong Kong are just some of the business reasons why many Fortune 500 companies have a base in Panama.

Panama's economy decelerated sharply during the first quarter of 2008 to 6.9% growth, down from the 10.41% economic growth during the same period of 2007, caused by the effects of the US slowdown. However, property prices are rising and sentiment remains positive. Infrastructure development is extensive, in addition to the Panama Canal expansion other mega-projects include; a US$7 billion oil refinery in Puerto Amuelles, plans to turn Balboa into the largest port in Latin America, a second megaport on the Pacific coast at Farfan, and Copa, a local airline, aspires to turn Panama into an alternative regional airline hub.⁵

Abu Dhabi - According to Jones Lang LaSalle, "Abu Dhabi (is set to become) a world winning city in the making, predicting the UAE capital to become the regional hub by 2015". Learning from Dubai's mistakes, urban planning takes a high priority along with high standards for construction. With an average growth rate of 5.2% per year, rental demand is at an all time high and it is not uncommon to see landlords asking for rent of 12 months in advance.

Malaysia - Mr Chan Sayeong, CEO of CapitaLand Malaysia told IP Global "Malaysia is one of the strongest economies in the region due to its export levels, oil, gas and commodities. Residential property prices are currently stable and commercial property is growing quickly due to the lack of supply of Grade A in Kuala Lumpur." Malaysia's high level of liquidity, where some RM10 billion is circulating in house buyers' hands now, due to the newly amended Employee's Provident Fund's rules allowing members to withdraw funds for the purpose of home buying will further propel the market.

In the commercial market sentiment remains positive. KLCC Properties expects office demand in Kuala Lumpur to remain buoyant, given the strong demand from oil and gas industries and as prime grade A-plus supply remains tight, with vacancies of approximately 3-5%.⁶

Thailand - There have been 17 coups in Thailand since the Second World War and these tend to be a part of the political landscape of the country. Whilst the current political standoff may slightly affect asset prices in the short term, we believe that if the situation is resolved in the near future then long term fundamentals are strong and the signs are that Real GDP growth is set to average 4.5-5% per year in 2008-09.

Vietnam - Post credit crunch Vietnam has witnessed a tightening of bank credit causing a puncture in the real estate bubble. Residential prices are now 20%+ below end-2007 levels and buying sentiment is expected to be negatively affected by the 25% capital gains tax on property transactions due to come into effect in January 2009.⁷ However property consultants and investors remain upbeat about Vietnam when taken with a mid-long term view. Regularly compared to China a decade ago, it is thought the slump in the market so far this year mirrors China mid-1990's, a result of rapid growth followed by a reactionary cooling followed by stabilisation.

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The above commentary has been provided independently by IP Global Limited and is for reference only. As with any market, conditions do change and of course personal circumstances vary from client to client. You are therefore advised not to rely on the information above, but instead to meet with one of IP Global's team before deciding to follow any course of action. The Henley Group Limited shall not be responsible or liable for any damage or loss caused by the use or reliance on the information provided.