The financial turmoil in Asia has had a broad and dramatic effect on all economic sectors, but perhaps most severely on real estate. Although Asian governments were quick to enact laws and programs designed to spur foreign investment, Asian real estate values continued to fall. Initially, the lack of activity in the Asian real estate market could be traced to an unwillingness to accept the circumstances. This almost universal denial is understandable, given the prior 30 to 40 years of unprecedented success. For example, Korea's annual growth rate of 6.6 percent, sustained over the last 40 years, makes it one of the best performing emerging markets in the world.
Similar accomplishments abound in the region.
It is not surprising then that Asian nations did not immediately abandon decades of proven business techniques at the outbreak of the crisis. However, even now that the problems are more fully recognized, real estate transactions still are not occurring. The problem is a veritable paucity of real estate transactions in any major Asian commercial district during the decades preceding the crisis. In a culture where land represents power and wealth, the disposition of real estate assets could be considered a sign of weakness. The few transactions which did occur often were not arms' length, and so not useful as an indicator of value.