Expect property bubbles of an "unprecedented magnitude" across Asia in 2011, if the region's central banks don't move to tighten monetary policy at an appropriate speed, warned Dominique Dwor-Frecaut, macro strategist at Royal Bank of Scotland.
Central banks in Asia are "importing monetary policy conditions which are far too loose for them," Dwor-Frecaut said on CNBC Monday.
Flexible monetary policy in the West is a result of the "systemic banking crisis" or "real estate price deflation" plaguing countries in Europe and in the United States. "These are not the problems of Asian countries," she pointed out.
Dwor-Frecaut stressed that emerging markets like China, Taiwan and Singapore must adopt more flexible exchange regimes and allow their currencies to appreciate in order to reflect the strength of their economies.
"Countries that refuse to let their currency appreciate...are going to see their real estate market become more and more bubbly."
In a recent report, she noted that residential property prices in Hong Kong and Taiwan were already 20% above their 2008 peak; while in Singapore and Malaysia, prices had been above 2008 levels at the end of June 2010.