With the growth in cross-border investment and the focus on intra-Asia investment, ASEAN countries have seen greater interest from foreign investors, especially from North Asia.
Hong Kong, 26 March 2019 – Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in commercial real estate services, today released a white paper Decoding South East Asia Real Estate: Insights for Owners, which provides market snapshots for six emerging markets and outlines real estate investment opportunities across Indonesia, Malaysia, Myanmar, Thailand, Philippines and Vietnam.
David Faulkner, Managing Director of Valuation & Advisory Services, Asia, at Colliers commented: “With the growth in cross-border investment and the focus on intra-Asia investment, ASEAN countries have seen greater interest from foreign investors, especially from North Asia. However, caution should to be exercised before determining whether a ‘new’ market would make a worthy addition to an investment portfolio.”
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%.
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%.
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% and yields round 8%. Investments in offices and serviced apartments also offer high yields of up to 10.5%.
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% vacancy level despite a 36% YoY growth in supply. Yields for prime office assets are in the region of 5.6%. Residential take-up for 2018 resulted in a new record high of 54,000 units with yields around 4.5%. We believe opportunities are in the fringe areas of major CBDs and areas surrounding major upcoming infrastructure projects.
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%. 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%.
Vietnam attracted foreign direct investment of around USD300 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. We expect to see more M&A deals in industrial parks by foreign investors. In the major cities, the office and retail sectors enjoy low vacancy rates, with yields around 5.5% and 8.5% respectively.
To download the white paper, visit here.