The Captain Crunch Currency Crush
It's a Wednesday morning as I find myself sitting in a hotel room in Jakarta channel surfing between Bloomberg and CNBC. Back and forth my finger flicks the thick as a brick remote control. Suddenly disaster kicks in as I mistakenly land in the unknown territory of TLC's Cake Boss and than even further underground onto Discovery's Amish Mafia. Panic grips my heart, as images of Kurtz comes to mind: "never get out of the boat." These are words I have centred my entire existence around.
Looking around the hotel room, the stark realisation dawns that there is no boat. Indeed this is the broadside which so many property investors and developers in Asia now find themselves in these crazy, volatile days. Dude, where's my boat? Yet we continue on.
We continue despite the blaring nasal tones being emitted from lavishly liquid Korean LCD television screens warning of the possible meltdown of the region's currencies. Size does matter, and the TVs dwarf a baby hippo – one of nature's most dangerous creatures.
The interplay between exchange rates and property is oftentimes compared to dirty dancing. A frenzied exchange between two parties that gives off enough steam to cook up some really tasty dim sum. But the steam forms a large question like cloud that just passed over in the dark blue sky outside. An apparition? Maybe…
"In emerging divergent markets such as Thailand, Indonesia and the Philippines what impact will big time currency depreciation have on real estate?"
Splitting the teams into good versus evil; on the holy side, with currency adjustments these export driven economies will of course become more competitive on a global basis with cheaper goods and services (assuming anyone in North America or Europe has pocket change a left to muster up a consumer rush). On the dark side; economic volatility often sidelines foreign property investors – a bit like a sports superstar who disappears after a doping scandal – steroids and property have, after all, been kissing cousins over the past three of four years of meteoric growth.
You have to wonder that despite widespread globalisation, broad markets in Asia have continued to be boosted by a rising middle class and domestic events. Do the ups and downs of currency really matter when the costs and expense are all a home field advantage anyway?
Heading down the up escalator, the gold rush of the post-GFC crisis still seems a distant memory. Neil Young said it best lyrically, echoing those beautifully haunting lines " keeps me searching for a heart of gold." We've seen skittish investors flock back to the perceived safe house of property as of late, finding that the glitter of gold becomes just a little too speculative, like the sporadic rise and fall of stock markets.
Counting out some coins on the hotel table, my mind starts rambling over what they are really worth. Or does it matter? My dim sum is calling and it's time to cash up and spend. While I loathe that term "glocal", the relevance to today's inevitable shift back to mono remains a locomotive on rails. Is property truly an international event or have the tables been turned back to one of inevitable domestication?
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