Real estate markets across Asia generally started 2019 on a positive note with friendly government policies, tax reforms and infrastructure spending propping up demand according to the Asia Market Snapshot Q1 report by Colliers International.
Generally, investors were seen diversifying away from more traditional sectors such as office space and housing into segments such as data centres and warehousing in Q1.
Below are some key highlights from the ASEAN markets:
- Industrial sector in focus: The sector is expected to benefit from improved connectivity along Thailand’s Eastern Economic Corridor (EEC), a manufacturing zone on the eastern seaboard, while in Vietnam surging interest on the back of US-China trade tensions is powering the growth of factory and logistics facilities in the country’s west.
- Singapore commercial assets shine: Commercial property in Singapore is expected to remain highly attractive to investors and developers, with office rental growth continuing. Rising visitor numbers combined with tight supply is also raising revenue forecasts in the hotel sector. Activity in the residential space is expected to be relatively subdued in the second quarter as developers focus on new property launches.
- FDI flocks to Vietnam: Vietnam saw foreign direct investment (FDI) of US$2.58 billion in the first two months of 2019, a y-o-y increase of nearly 10 per cent, with real estate the second-most invested sector in terms of total FDI contributions.
What can we expect in Q2?
- Indonesia: With speculative property investment likely to remain on hold as a result of the presidential election and Muslim fasting month, investors can expect an uptick in the residential and logistics sectors, as well as in the co-working space.
- Myanmar: The liberalisation of industries such as banking & insurance, as well as wholesale & retail activities, are expected to further facilitate growth in the office and retail sectors, resulting in better quality spaces and a stabilization of rental rates in these sectors.
- Philippines: Over the past three years, the Metro Manila office market has witnessed a diversification of its tenant base. The outsourcing sector remains strong and is likely to contribute between 20- to 30 per cent to total office space take-up in 2019.
- Thailand: Stability remains a top priority for real estate investors in Thailand, with general elections held this year. The large number of commercial construction projects currently underway in Bangkok and elsewhere in the country saw real estate investors shifting their focus from signing new capital commitments to existing ones.
- Vietnam: As Vietnam’s economy continues to grow rapidly, the industrial and office sectors continue to be top-of-mind for investors in the country. Growth is expected to be on the uptick for the industrial (factory and logistics) market in the West, North-West and South-West of Vietnam.