Southeast Asia’s property markets looking up thanks to young population, upbeat GDP growth, analysts say

30-Jan-2019 Intellasia | South China Morning Post | 7:44 AM Print This Post

Vietnam and Singapore are tipped to lead price growth in the property markets in Southeast Asia this year, underpinned by the region’s youthful population and relatively long period of political stability.

“The youthful population is playing a large part in the growth of the region, and the long period of political stability in the region is helping too,” said Chris Marriott, Southeast Asia chief executive officer at Savills.

Asean data shows the 10 member states had a combined population of 642.1 million in 2017, with roughly half between the ages of 20 and 54.

Except for the 2014 coup in Thailand, transfer of power in many of the southeast Asian states has been relatively peaceful, resulting in an average annual growth rate of 5.3 per cent for the region from 2000 to 2017. In comparison, the European Union had an average annual growth rate of 1.4 per cent from 2012 to 2017.

The property markets of the southeast Asian economies received foreign investment amounting to $7.79 billion in 2018, a 15 per cent decline from the $9.16 billion in 2017, according to data from Real Capital Analytics.

As of the third week of January, the region has received about $2.05 billion in foreign investment, with Singapore getting the lion’s share with $1.97 billion, followed by Vietnam at $33.2 million.

In Singapore, tech companies Google and Yahoo were looking to add a combined 850,000 square feet of office space, Mariott said.

Vietnam has positioned itself as a manufacturing hub ready to compete with China amid the ongoing trade war between Washington and Beijing. In 2018, total exports amounted to about $245 billion, up 13.8 per cent on year.

South Korea’s Samsung is one of the major investors in Vietnam. The company and its subsidiaries employ 110,000 workers in Vietnam, about 1.5 per cent of the total working age population.

Property consultancy Colliers also tagged Singapore as Asia’s firmest office market.

“In 2019, with a lower but benign real GDP growth forecast of 2.5 per cent, we think demand will stay firm and the government’s push to promote technology, innovation and research and development will help feed growth in the market,” Colliers said in its latest Asia Market Outlook.

Knight Frank executive director Thomas Lam agreed that economic growth in Southeast Asia would continue to boost the property markets in the region.

“The likes of Singapore, Thailand, and Malaysia are considered safe havens, while economic growth in countries such as Vietnam, Cambodia, and Philippines will lend support to the property market,” he said.

However, not everyone is bullish on the region.

Justin Eng, Knight Frank senior manager for Asia-Pacific research, said the property markets in the region face challenges owing to a slowing economy and the US-China trade war.

“We expect the Asean five [Indonesia, Malaysia, Philippines, Thailand, Vietnam] property markets to see slower growth this year with the exception of a few residential markets namely Malaysia and Philippines,” Eng said.

“Office markets are likely to encounter a challenging 2019 as most markets face supply concerns this year. Trade tensions between the US and China will slow trade globally, impeding growth in the industrial market.”


Category: Regional

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