FORECAST ROBUST growth within the Association of Southeast Asian Nations (ASEAN) is expected to prop up the real estate sector on the back of strong domestic demand, according to a report from consulting firm Jones Lang LaSalle released yesterday.
In particular, growth will be experienced in the office, industrial and logistics and retail spaces.
“This growth translates to robust domestic investment into commercial property, driving demand for office and logistics space.
“Increased consumer spending will boost demand for expanded retail formats, which in turn will support the developments of retail malls and the subsequent accompanying infrastructure in emerging markets,” said Chris Fossick, managing director of Jones Lang LaSalle Singapore and Southeast Asia.
Add to the upbeat outlook is the “increased transparency in the real estate market” in ASEAN economies, or proper disclosure of costs and transactions involved in property ownership.
The consulting firm said in its recent transparency report that six ASEAN countries saw improved scores last year, namely, Singapore, Malaysia, the Philippines, Indonesia, Thailand and Vietnam.
Meanwhile, Jones Lang LaSalle sees a growing labor market, more sophisticated needs and new markets as key opportunities for the property sector.
“While economic growth drives corporate activity across Southeast Asia, businesses are making changes to accommodate growing workforce and modernized office spaces in new, emerging markets,” the report said.
In particular, Jakarta, the Philippines and Thailand were cited to rising demand in office space.
It said the Philippines “often overlooked by investors, witnessed record levels in demand for office space, sparking new developments in previously unexplored sub markets and a 3% rise in rents from the same period 2012.”
Indonesia was noted to have more than doubled its office space demand in four years, while Thailand saw a recovery in its real estate market.
Jones Lang LaSalle said “demand for offices will spike and vacancy levels are forecasted to reach historic lows by 2014.”
The industrial and logistics market will also see growth “thanks to improvements in Southeast Asian economies and international trade, ASEAN industrial and logistics markets have reached historic highs and show no signs of slowing, as trade volumes are predicted to increase by 130%.”
“Real estate will have a critical role in driving trade and industrial growth,” the firm said. It added many markets have already experienced an increase in rates as most developers “will seek new markets.”
Further, the consulting firm noted that stronger consumer confidence is expected to drive the retail market.
Jones Lang LaSalle said Indonesia leads the region in retail market growth followed by Thailand.
“… (T)he retail industry is in a unique position to influence and be involved in many key aspects of development in the Southeast Asia region, both economic and social. There is a role for the industry in areas such as infrastructure, housing, education, health care, tourism and industry and trade which are all inextricably linked,” said Mr. Fossick.
Robust growth seen to prop up real estate | BusinessWorld Online.