Stephen Atherton, vice president and managing director of NAIAsia Pacific, noted that political instability in Southeast Asia isposing formidable obstacles to investors. Indonesia's president isfacing impeachment, as is the newly elected prime minister ofThailand, the president of the Philippines was recently ousted andthe country is facing assaults by Muslim extremists. Malaysia andSingapore face problems as well.

That unrest has led investors to seek refuge to the north inChina, Japan and Taiwan. Over 80% of the mergers and acquisitionsin Asia last year took place in northern Asia, more than a third ofthem in Japan. The huge Chinese population and the wealthyconsumers of its northern neighbors are proving much moreattractive to business than the political turmoil of SoutheastAsia.

Across the pond, the European property markets experiencedstrong rental grow in 2002, says David Perry, vp and managingdirector of NAI Europe. Class A office space in Paris and Madridgrew by 40% last year while vacancy rates in many European citiesremained at near 2%. Unlike the 1980s, class A space is tight, sothat even a steep decline in demand will not produce a highoversupply like that seen in the early 90s.

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