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Economy �
The Euro Crisis ’ Impact
On The European Union
To assess Real Estate investment environment in Europe , we have to look at the fundamental issues surrounding the European Economy .
According to UBS , the two market segments that will outperform the rest of the market are the logistics and office real estate
There are structural problems with the Euro Zone Economy mainly high debt and insolvency issues . It reminds us very much of the situation in Asia between 1997 and 1998 where the economies of Thailand , Indonesia , Korea and Malaysia were being gripped by the same issues which triggered high unemployment and social upheaval . The total value of the Thai Stock at the time was less than the capitalization of Chrysler !! Since those dark days , Asia has recovered spectacularly by adhering to a disciplined regime of current account control , which in turn meant controlling debt reducing it and eventually paying it back .
If we look at the countries involved in the Euro Zone crisis ( Spain , Portugal , Italy , Greece and Ireland ), we will see that all these nations have reduced their current account deficit to a such point that next year they will be in surplus ( i . e . they will start repaying their debts ). On top of that , they have reduced the unit labour cost by more than 8 %. As a whole , we are looking at an improving picture . Obviously , the recovery will not be as rapid as the Asian Countries , for the simple reason that in 1998 , the economic environment in the world was in a better situation than today .
Is Italy much worth than Apple Corp !!
As an investor , you have to look at this in simplified terms . The capitalization of the Italian Stock Market at a certain point was equal to that of Apple Corp , the question that comes immediately to mind : isn ’ t Italy
12 DORCHESTER April - 2013