Even with the uncertain global outlook, real estate investment opportunities continue to exist in Southeast Asia, according to commercial real estate services provider Colliers International.
In its white paper Decoding South East Asia Real Estate: Insights for Owners, it was found that Asean governments are focusing on policy change and infrastructure to attract foreign investors. The report specifically looked at six emerging markets, namely Indonesia, Malaysia, Myanmar, Thailand, Philippines and Vietnam.
These are summaries of the following markets from the white paper:
The Indonesian property market is concentrated in two major cities – Jakarta and Surabaya. Foreign and domestic investment has increased due to government policy changes. Infrastructure development is now a main focus for the government, which creates opportunities for transit-oriented and industrial estate developments. Depending on property type, the typical yields available are between 6-10 per cent.
Tax incentives are proposed to address priorities such as digitalising the industrial sector, stabilising the property market, and relieving the costs of doing business in Malaysia. Property market opportunities are concentrated around Kuala Lumpur, and in the office and retail sectors. Yields are in the region of 5.5-6.5 per cent.
The number of mid-income families in Myanmar is growing, translating to higher consumption and overall spending. Investment opportunities occur mainly around Yangon. The retail market provides investment opportunities as lifestyle destination malls with wide offerings become increasingly available, with vacancy rates at 5 per cent and yields round 8 per cent. Investments in offices and serviced apartments also offer high yields of up to 10.5 per cent.
Economic activity is concentrated in and around Manila. The government is investing in large scale infrastructure improvements. Metro Manila’s office sector remains robust, maintaining a 5 per cent vacancy level despite a 36 per cent year on year growth in supply. Yields for prime office assets are in the region of 5.6 per cent. Residential take-up for 2018 resulted in a new record high of 54,000 units with yields around 4.5 per cent.
Bangkok drives the Thai economy, particularly in the hospitality and office sectors. Tourist arrivals continue to increase, and hotel investors continue to capitalise on this. Yields are in the region of 6 per cent. Opportunities are also available for office renovation projects in the Bangkok CBD, where the market is currently experiencing a stock shortage. Office yields are currently around 5.5 per cent.
Vietnam attracted foreign direct investment of around US$300 billion in 2018 and is a popular destination for Japanese, Singaporean and other property investors. The industrial sector is poised for strong growth in the next couple of years as Vietnam is increasingly seen as an attractive destination for industrial operations.