Commercial actual property markets within the U.S. and China are financial ache factors to watch in a higher-for-longer price surroundings, stated Singapore’s United Overseas Bank. But the financial institution stays optimistic about one key area.
“The U.S. commercial actual property stays a hotspot, particularly with the low occupancy charges that we have now,” Lee Wai Fai, chief monetary officer of UOB instructed CNBC’s “Street Signs Asia.”
Vacancy rates for office buildings climbed to a document excessive of 18.2% in late 2022.
“The different hotspots will probably be China, there [are] worries concerning the high quality and whether or not they can handle the property uncertainty in China,” he added.
China’s property market has struggled with faltering shopper confidence as main builders like Evergrande and Country Garden stay mired in debt issues.
Lee added the world is heading right into a extra “unsure surroundings” and the impression of higher-for-longer rates of interest is beginning to filter via the financial system.
The world’s central banks have hiked rates of interest aggressively over the previous 18 months or so in a bid to rein in hovering inflation, with various levels of success.
“China restoration has but to come back about. And in fact, the latest geopolitical stress has added to the volatility,” he added.
ASEAN’s resilience
That being stated, despite a bumpy macroeconomic surroundings, Lee expects the ASEAN area to stay resilient, citing funding flows significantly in new financial system areas akin to sustainability.
“But [for] our regional fundamentals, we’re assured, as a result of we nonetheless have low unemployment and strong consumption,” he stated, including that provide chains are additionally shifting into Southeast Asia.
Foreign direct funding flows to Southeast Asia have “elevated by an element of 9 during the last 20 years, with over half of those going to Singapore,” philanthropic group Hinrich Foundation noted in a February report.
UOB on Thursday posted a core net profit of $1.5 billion for the third quarter of economic 12 months 2023 ending Sept. 30, rising 5% from a 12 months in the past.