No property bubble brewing in Iskandar, which is at ‘take-off’ point….
Iskandar is a good example of diligent planning and foresight on the part of the Malaysian government and the area has now reached what could be described as a “take-off” point. Developments should start to become self-generating, creating the potential for a virtuous circle.
Singapore, located across a narrow waterway, has vested interest in Iskandar’s success. As long as the close cooperation between Malaysia and Singapore continues, it could be a win-win situation for both countries. Recently, the two countries announced plans to strengthen economic tires – including through further cooperation developing Iskandar as well as a high-speed rail link between Kuala Lumpur and Singapore. There is a great potential for intra-regional trade and development in Southeast Asia, and this is a prime example of that trend.
For 2013, the International Monetary Funds project GDP growth in developing Asia at 7.1%, versus 1.2% for advanced economies. In the long run, they believe strong economic growth should translate into higher earnings growth in developing Asia.
Another encouraging trend emerging is the Inter-Asian trade which is currently on the rise. There is increased exports from Asia to China, with exports to the US falling as a percentage of the total. This means there is less dependence on the US for export growth and buoyant demand from emerging economies could help offset the impact of weakness in the developed world.
Demographics represent another interesting trend that creates a variety of potential investment opportunities, particularly related to the consumer sector. If you examine the population pyramids, you will see that the demographics of emerging Asia indicate a great number of young people, which equates to a lower dependency ratio. That is, more people fall into the working population by age so there are fewer dependents.
As of 2010, the pyramid was skewed towards younger people, whereas in Japan and the US, the elderly were a lager percentage of the total population. These trends are expected to continue diverging.