I think a problem with any asset or investment class these days is the amount of debt and leverage involved in all markets.

My biggest fear as an investor right now would be China. A drop in Chinese asset values would not only shake confidence in China's economic vitality, but it would also open debate about whether or not the global economy is over-leveraged and over-reliant on the success of China (it is).

Excessive leverage is partly what made the property bubble (http://australianpropertyforum.com/blog/main/3572869) aftermath so devastating for Japan, America and Ireland. There's a lot of debate about the Chinese economic bubble and it's potential impact on the global economy. Several months ago, so-called Chinese 'expert' Nick Lardy dismissed worries about what he called the "so-called property bubble" - this was during a conference held at Peterson Institute in DC.

However, he now concedes that says a real estate downturn may cause a significant in China, and this is an opinion shared by many other mainstream economic analysts.

So what changed his opinion? I would suggest a dawning realisation that most of the massive Chinese stimulus, lending and spending during 2009/10 just ended up in property purchases, which drove real estate prices in an alarming and totally unsustainable manner. The other issue is Chinese population growth (http://australianpropertyforum.com/blog/main/3580451) has declined markedly since the one child policy. Also, a realisation that China's economic system frequently produces bubbles, and that's not very likely to change in the near future!!

To understand why excessive debt and leverage is going to have a hugely negative impact on all asset classes going forward, read up on some of the work by Professor Steve Keen (http://australianpropertyforum.com/blog/main/3567572). He's the Australian guy who predicted the GFC, and he has also shown that unsustainable debt to GDP ratios in a country (which you definitely have in the UK, and we have in Australia too) will always result in deflation or depression.

Matt Cooper
Real Estate Australia
http://australianpropertyforum.com/blog/main/3580455

What is wrong with leasing (for any number of years) rather than selling off assets? With leasing one can get a regular income, which can even increase if it is properly written into the original agreement. The Chinese in particular, have a tendency to bring in and to employ their own people who seldom bother to speak the local language. Leasing can stop that.