A Comparative Analysis for Office Investment Markets in South-East Asia

Most of the research undertaken into the determinants of office investment markets has examined European and North America cities. Although South-East Asia has been marked by high economic growth from the early 1990s to the mid-1997, it has largely been ignored. With the increasing globalisation of investments, it is very important to understand the environment of these investment markets. Before undertaking quantitative analysis for South-East Asia, it is also important to classify those markets in terms of the progress of their development. Opportunities in both the user and investor markets will be constrained by the legal system of property rights and the quality of professional advice available to those transacting property investments, with obvious implications for property rights. Therefore, in order to understand fully the property market, it is necessary to consider the nature and evolution of the markets as well as their economic condition. Analysts usually look at economic conditions at a national or regional level, as well as the urban economies. However, the cultural framework is usually ignored. Most of the popular analytical framework is justified by the demand and supply conditions in three sub-markets: user, investment and development. The first half of this paper will identify the macro-economic drivers of office rental values in South-east Asian cities over the period 1988 ñ 2001 by adopting the demand and supply framework. The paper uses the existing single-equation method to examine influences on office rents in five South-east Asian cities (Singapore, Hong Kong, Taipei, Kuala Lumpur and Bangkok). Real GDP, unemployment rate, floor space for office buildings, interest rate, lending rate, consumer index and service sector output will be included in examining the movements of office rental values. The second part of the paper will identify the importance and working of a range of institutional factors, and their status in each of these cities. Looking at these institutional factors in a particular circumstance may provide additional information on how the market works. This in turn, will help investors in their decision making process.