A new report from Moody's Investors Service is good news for East Asian real estate development and management companies. The report states that real estate will remain a stable part of East Asian economies despite the recent Asian financial crisis. East Asian real estate development and management companies maintained their investment grade ratings, according to Moody's. "Substantial recurring income and prudent financial management and diversification strategies support the relatively high ratings of East Asian real estate firms," explains Moody's Hong Kong-based analyst Clara Lau. Also evaluated are operational strength, competitive edge and corporate structure.
In addition, Asian government also plays an important role in the property markets. "Understanding government housing and land policy is foremost in our analysis because in many parts of East Asia governments are the largest landowners and housing providers," says Lau. "They also set the regulatory and mortgage finance frameworks." In Singapore and Hong Kong, for example, governments regularly adjust land sales based on projected demand, and in South Korea the government used to set a benchmark for private-property prices.
"We expect the recovery of Asian property markets and the flexibility of the capital markets to encourage more property firms in East Asia to tap the bond market," Lau notes.
