* Boost in emrg mkt prop. demand in mid, long term -Roubini
* Sees risk from run-up in oil prices on inflation
* Concerns over flood of maturing commercial mortgages
By Daryl Loo
CANNES, France, March 10 Surging growth in
emerging markets such as China and India will boost demand for
real estate, although uncertainties such as an oil shock could
pose major risks, economist Nouriel Roubini said on Thursday.
"The growth of emerging markets is going to be, in the
medium and long term, positive for both commercial and
residential real estate," Roubini, an economics professor at New
York University, said at the MIPIM property trade fair.
"We have fast-growing economies where income and wages are
growing, industrialisation and urbanisation on a massive scale
in China today, and increasingly so in India and most other
emerging markets," he told reporters at a press briefing on the
sidelines of the event.
This means there will be huge demand for new homes, shops
and offices in these countries, although, in the short term, the
ongoing turmoil in the Middle East could hurt the growth
prospects in these countries if oil prices spike, he said.
Brent crude rose for a second day on Thursday to surpass
$116 after forces loyal to Libyan leader Muammar Gaddafi bombed
oil industry infrastructure, inflicting longer-term damage on
the country's exporting capacity. [ID:nL3E7EA0I7]
"If oil prices were to go to $140-$150 a barrel, this story
could be different ... the impact of oil prices is more
significant on inflation in emerging markets, less in developed
economies," said the Turkey-born Roubini.
The growth prospects for real estate in more economically
advanced economies, such as the U.S. and Europe, are different
from emerging markets as they face years of deleveraging after
the excesses that led to the global financial meltdown, said
Roubini, dubbed Dr. Doom for warning of the crisis before 2007.
"There's an ongoing process of deleveraging and many banks
on the U.S. have recapitalised faster than those in Europe. And
I think the Europeans have been behind the curve and till have
many bad assets on their balance sheets," he said.
"Especially in commercial real estate both in the U.S and
Europe, where a lot of the mortgages issued in the middle of the
decade is coming to maturity. It is a timebomb that needs to be
addressed," Roubini said.
"In the next few years with fiscal austerity and exit from
zero rates in the UK, the Eurozone and eventually the U.S., is
there enough resilience for growth in consumption and in the
corporate sector? I think that is an open question," he added.
(Reporting by Daryl Loo; Editing by Andrew Macdonald)
(See www.reutersrealestate.com for the global service for real
estate professionals from Reuters)