R1 SCMP Real Estate Cycle Nearing Peak Dec 1 2005

R1 SCMP Real Estate Cycle Nearing Peak Dec 1 2005 -...

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Wednesday, November 30, 2005 South China Morning Post CONCRETE ANALYSIS Real estate cycle may be nearing peak Historic pattern suggests approaching maturity, but economic patterns have changed since the 1997 economic crisis CHI LO Cyclical experience suggests that the property cycle is peaking out. The average duration for the office market cycle was 20.5 quarters in past cycles, while that for the residential market was 21.3 quarters. The present cycle is already 10 quarters old for both the office and residential sectors. If history is any guide, the up-cycle is approaching maturity. The behaviour of the grade-A office and luxury residential markets is similar to that of the overall market. However, past cyclical behaviour may not be indicative of the future because the cycle dynamics have undergone a structural shift, due to a change in the underlying economic pattern following the Asian economic crisis. In the 1980s and '90s, Hong Kong had a high-inflation economy with robust growth. Low and
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