Hong Kong, 24 June 2016
– In our view, the UK’s unexpected vote to leave the EU has three chief implications for Asia Pacific property markets.
1) Brexit will probably lead to further downward pressure on already very low global bond yields, increasing the relative attraction of the 3-6% yields on core APAC investment property.
2) The vote should remind investors of the potential for shocks in developed as well as emerging countries, and hence mitigate political and economic concerns about the APAC region.
3) The vote may mean that real interest rates stay low for longer than we have assumed up to now, to the near-term benefit of Hong Kong and other regional markets.
These implications support the cautiously positive stance on core investment property that we advanced in our recent APAC Capital Markets report.
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