Source: Bloomberg

Author: Harry Suhartono, Finbarr Flynn

From South Korea to Vietnam to Hong Kong, the builders and creditors in many Asian economies are feeling the impact of soaring interest rates and regulatory rectification. This also highlights the dilemma of the real estate industry in the Asian region.The property market crisis.

The strong currency tightening and the crown disease epidemic have a more significant impact on European and American commercial real estate, while in Asia, the residential market has undergone greater pressure.Among them, the heaviest South Korea, the largest decline in housing prices in 25 years, and the debt dilemma of a construction company has re -triggers people's concerns about the reopening of the local credit market in 2022.

"Economys with heavy burdens of consumer debt or balance sheets will need to pay attention," said Kheng Sng, the fixed income director of the State Street Global Advisors."South Korea is one of them. The real estate market has been going down."

The following is some economies that may erupt in the real estate market in 2024:

Korea

In Asia, the pressure of the Korean real estate market is second only to China. After the rising house prices have risen in 2023, the decline has reached the most in 25 years.The direct reason for this result was the monetary policy of the Central Bank of Korea. The bank became the first major Asian central bank to launch the current currency tightening cycle in 2021, and increased the policy interest rate to 15 years.

At the end of 2022, the weak situation of the real estate market evolved into a crisis. At that time, a theme park developer broke out debt problems. The snowball -type diffusion effect caused the South Korean credit market to fall into the most serious collapse since the global financial crisis.The South Korean government has taken a series of rescue measures to stabilize the situation. By the end of December 2023, an engineering construction company asked for reorganization debts, which prompted the official commitment to provide more support.

The bad debts of families and enterprises have been accumulated. The Bank of Korea said that the risks related to project financing debt may increase in 2024. Such securities are used to financing construction projects, which is the factors behind the crisis of 2022.However, officials said that South Korea's financial system will remain stable.

Citi Group economist Kim Jin-Wook said that after the April 2024 election, the potential reorganization of real estate project financing loans may begin in the middle of the year, which may temporarily exacerbate the volatility of the short-term currency market.

Indonesia

The radical interest rate hikes of the Indonesian central bank have caused heavy liabilities residential builders, including PT Lippo Karawaci and PT Agung Podomoro because family purchasing power is suppressed.The depreciation of the local currency has made the market worsening. The cost of repayment of US dollar debts to the US dollar debt has risen sharply, forcing them to resort to the sale of assets to raise funds.

Fitch rating said at the end of November that Agung Podomoro's June 2024 expired $ 130 million (S $ 174 million) bonds may have some form of default. Previously, the company canceled the repurchase part of the unsecured notes.The offer.Fitch said that Lippo Karawaci's re -financing risk of Lippo Group Indonesia also risen risks, and the company's rating of the US dollar notes in January 2025 was rated to CCC+in January 2025.

However, as investors expect real estate demand to improve, the prospect of Indonesia's end tightening policy is boosting real estate bonds denominated in US dollars.

Fitch is expected to rise in the issue of local corporate bonds, as increased financing demand and the economic environment is more favorable.Fitch said that under the circumstances of uncertain interest rates, the demand for short -term bills will increase, and borrowers are expected to continue to prefer bond issuance of shorter periods in 2024.

Vietnam

The Vietnamese government launched an ambitious anti -corruption movement, which caused the real estate industry that was already troubled by the excess supply. The issuance of corporate bonds was hindered, triggering liquidity tightening, and borrower's arrears of repayment.However, regulatory intervention and multiple interest rate cuts have slowed the vicious circle.

"The Vietnamese real estate market has experienced a very challenging year, but we expect that the worst period of economic downturn has passed," Vinacapital Group LTD. chief economist Michael Kokalari wrote in the report."The interest rate of some bank mortgages reached 16%in early 2023, but then dropped sharply."

However, the signs still show that there are still many problems.S & P creditr Sueng said that some banks have weak capital cushioning, and some banks have high real estate.

One of Vietnam's largest developers Novaland Investment Group Corp. is a typical local real estate crisis, and the company's US dollar debt is particularly noticeable.After failing to pay interest in July, the company agreed to postpone the expiration date of the US $ 300 million convertible bonds held by the creditor.

Hong Kong

The permanent US dollar bonds issued by several developers in Hong Kong suffered the most violent sales in August in August. The market was worried about the impact of financing costs and the spread of real estate crisis in mainland China.At that time, the development of the new world led a decline. One of the most liabilities of the Hong Kong debt was inferior to the same industry in 2023.

Behind investors' nervousness is the plunge in the local real estate market, and house prices in Hong Kong have fallen to the lowest level in the past seven years.After the implementation of strict control measures and control measures and the historic currency tightening of the Federal Reserve, the rental income of Hong Kong office buildings and retail shops has also declined.

The demand is also in a downturn. Hong Kong developers can only lower the prices and reduce the promotion, and it is difficult for banks to discount.

Creditsights senior credit analyst Zerlina Zeng said that Hong Kong developers who have a large house and commercial real estate in low -line cities in mainland China are cautious. In addition, there are companies with a large number of office buildings outside the core area.Because such asset vacancy rates are high and rent is continuing negative adjustment.It also said that due to the rise in financing costs of Hong Kong dollars, and this situation is expected to continue in the first half of 2024, it will continue to continue to have a high -profile Hong Kong developer with a high leverage rate.

Australia

The pressure of the real estate industry in Australia is slightly different. The Australian central bank's radical tightening cycle has triggered concerns about the rise in interest rates.

The International Monetary Fund said that Australia may feel the impact of rising loan costs. During the epidemic, a large number of solid -interest housing loans issued with low -level interest rates will be re -priced into higher floating interest rates.According to IMF data, more than 50%of Australia's mortgage loans use floating interest rates.

Australian Central Bank warned in October that a small number of families were in the early stages of financial pressure, but this group was expanding.The bank said that once the period expires, about 14%of the fixed interest rate borrowers are expected to face a mortgage repayment amount by more than 60%.

Australia's prudent regulatory bureau related banks' residential real estate exposure data shows that new non -performing loans have risen to three years, but they still maintain a relatively low level.