Tuesday, November 07, 2006

The Latest Global Bubble: Asian Commercial Real Estate

Asian rents in Singapore, Hong Kong, Japan, and China are rising rapidly, and REIT's (Real Estate Investment Trusts) are turning to these as a profitable investment. (See here for Ismail's take.)

Singapore
[Thanks to trillamar.com for the photo of Singapore.]

I guess Asian real estate is one of our current bubbles (along with US corporate profits, corporate bonds and corporate borrowing.)

That clicks with the excess global liquidity hypothesis -- and I do think there is a worldwide inflationary bubble, because for about a decade now (and at their own admission) the US and Japan have been pumping credit into the international system like there's no tomorrow. And let's admit it, any attempts to withdraw the liquidity are feeble.

This inflationary credit (mostly in dollars and yen but there's also some Euros in there) is looking desperately for a place to park. The stock markets are full, gold and commodities are high and holding, US and the Western World's real estate is chockablock, and personal consumption -- well, the whole of America has mortgaged its own grandchildren.

So where else is there to go? I guess some in the investment world believe you should get rid of those excess dollars and yen by getting into some Asian real estate.

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