As ASEAN integration is set to go into effect, the industrial, retail and office real estate in markets across the region could heat up, according CBRE’s latest Viewpoint Research Report, ASEAN Economic Community – A Boost to South East Asia’s Real Estate Market. CBRE Research expects most ASEAN markets to benefit from it in the short to medium term as more Small and Medium Enterprises (SMEs) and multinational companies (MNCs) try to establish themselves in the region.
Office demand will grow as a byproduct of the increase in the industrial market as more MNCs enter the market and more regional SMEs expand. The financial and legal services sectors in emerging markets could grow as well which would also see the demand for office space increase. Foreign retailers may also look to expand into markets across the ASEAN, as they hope to build on momentum they have enjoyed over the past few years, the reported added.
“While there exist hurdles and limitations that ASEAN needs to overcome, the region is still anticipated to remain an attractive proposition for businesses and commercial real estate with the implementation of the AEC serving to strengthen ASEAN’s development,” Desmond Sim, head of CBRE Research, Singapore and South East Asia, said.
Of course, growth in these real estate sectors is not guaranteed. Some volatility in retail rents is possible due to an ill-managed institutional supply pipeline that could delay or even convince some retailers not to expand into these markets, the reported stated.
There is also uncertainty over real estate investment policies in some countries and if those with restrictions on the ownership of property by foreigners are willing to adjust them. Real estate investors are deterred by restrictions on foreign land ownership and the short duration of leases in many countries in the ASEAN.
“The diversity in the development of the real estate markets in ASEAN provides investors a broader investible universe for their investment strategies. Investments into ASEAN real estate market is thus expected to grow as investors seek alternative markets for their real estate portfolios,” Sim concluded.
