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Western investors to focus on emerging markets

DUBAI: Western investors are likely to turn to emerging markets in the Middle East, Southeast Asia and Asia Pacific as developed economies lag on financial recovery, said Ethan Penner, president of CB Richard Ellis (CBRE) CapitalPartners and executive managing director of CBRE Investors.

"Many investors believe that real estate as asset class offers diversification away from stocks and bonds and that in my opinion is a mistake. Commercial real estate is completely and perfectly correlated one-to-one to the broader economy. The macro economic climate and the health of the financial system are the two driving forces that dominate real estate value," said Penner in his keynote address on day two of Cityscape Global 2010, reported Cityscape in a press release on Wednesday, Oct 6.

Only a growing economy could generate sustainable demand for space, added Penner.

He projected a sobering average growth of 1% for developed economies, reminiscent of Japan's economic growth over the last twenty years.

Penner's views are shared by US investment guru Tom J Barrack Jr, who claimed that smart money is now focusing on emerging markets, which is outperforming the more mature markets in US and Europe.

The future of real estate in emerging markets looks bright as they are unhindered by unsustainable levels of debt and have healthy growing economies, shared Chris Speller, group director for Cityscape Global.

Though there is a risk of these markets becoming overheated again, said Speller, Asian economies have learnt from previous economic crises and authorities are putting regulation in place to avoid future property bubbles.

Cityscape Global is one of the world's largest international business-to-business real estate investment and development conference held annually, and features an exhibition that brings together regional and international companies from various fields related to property. This year's event is held from Oct 4 to 7, 2010 at the Dubai International Exhibition Centre.
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