Prof. CHAU, Kwong Wing
Technical Director, Centre for R.E & Urban Economics Uni. of Hong
2000 Global R.E.
In the future, the global real estate industry will be
more integ-rated. The influence of the financial sector on the real estate industry
will continue to increase; eventually, the real estate market will be part of
the financial market. Real estate professionals today must equip themselves with
knowledge in finance if they are to remain com-petitive. Due to the globalization
of the financial market and the in-creased freedom in the mobility of funds across
national borders, there will be stronger interdependence among real estate markets.
In the future, public sector involvement in the real estate sector will continue
to decline. Resource allocation in real estate in any country will rely more
on market mechanisms.
HK R. E. in the
The land supply in Hong Kong has been changed since the
hand over in 1997. Asset price inflation like that experienced in the 80s and
90s is very unlikely to happen again in the foreseeable future since land sup-ply
is no longer artificially restricted. In turn, demand for residential pro-perty
is still strong due to the long-suppressed demand and also the re-cent increase
in the supply of cre-dits for residential mort-gages. But demand for commercial
and indus-trial buildings is still very weak and will remain weak during 2000.
Prices of residential properties will be stable but those of office & indus-trial
properties will continue to dec-line with increasing vacancy rates.
Innovations in the
There will be two major areas of innovation. One relates
to the phy-sical real estate asset and the other relates to the rights over the
physi-cal real estate. Buildings will be more intelligent and more environmental-ly
friendly. Real estate production will also rely more on the use of prefabricated
components that are produced under factory conditions.
A majority of real estate inno-vation in the future will
be related to the delineation of packages of rights over the real estate and
the institut-ional arrangements for transaction of these rights in the market.
This in-novation can take the form of stand-ardized and graded lease contracts,
securitized real estate etc. These instru-ments were invented to lower the tran-saction
costs of buying-selling real estate directly and help to improve the efficiency
of utilization of space.
Tackling the Thai
In the long run, the more open the real estate market,
the more efficient the market in terms of allocating re-sources. The government's
role in the market should be confined to the protection of the rights of property
owners, enforcement of transaction contracts and enhancing the transmis-sion
of accurate information about market activities. Other forms of inter-vention
such as direct investment in, or provision of, real estate, rent control, price
control and varous forms of taxes which aim at "regulating the market" should
not be encouraged.
Be prepared for changes in the coming decade.
For Thai Valuers
Appraisers have to equip themselves with knowledge in economics, finance
and in-formation technology. The real estate sector is not an isolated
sector; it is closely related to the financial sector. Therefore, understanding
the dyna-mics of the interaction between the two sectors is important
for apprais-ing real estate values. The recent advances in information
techno-logy will also change the way real estate is located, transacted
and used. The impact of such changes on real estate values and valuation
methods cannot be ignored.