Cheap oil to benefit Asian property |markets: JLL
GLOBAL energy prices have plummeted over the past six months, raising economic concerns in some corners of the world, but for Asian real-estate markets the effect will be largely beneficial, according to Jones Lang LaSalle (JLL).
Oil prices have more than halved since last June and, for the first time since 2009, Brent crude oil dipped below US$50 a barrel. US crude also fell below $50.
However, unlike the 2009 price crash, which was driven primarily by a dip in demand, price declines in recent months are a result of increasing supply.
With Asia’s reliance on imported energy, balanced with its strong position as an exporter of goods to the West, lower energy expenditure should improve trade balances and support higher growth rates across Asia-Pacific markets, the real-estate consultancy says.
Nicholas Wilson, senior manager for Asia-Pacific capital markets at JLL, said the key winners in the region’s real-estate market were the retail and logistics sectors. Both logistics and retail markets will benefit from improving household balance sheets, as energy costs absorb less consumer income. This should result in improving demand for discretionary goods and will support retail and e-commerce spending.
Logistics markets will also benefit from falling transport costs, a key component for the market.
Real-estate developers are also likely to see some benefit from falling prices as the costs of building materials and transport will ease upward pressure on construction outlay.
The large energy-dependent economies of China, Japan, South Korea and India will be net beneficiaries of lower oil prices and as the largest markets in the Asia-Pacific region, this could reverberate throughout the region and provide downstream support to the developing economies.
