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| South East Asia - Strength in Diversity |
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Few regions are characterised by as much diversity as SE Asia. The region comprises developed economies such as Singapore, stable performers Malaysia and Thailand, as well as fast-growing upstart Vietnam and the vast Indonesian economy.
Government initiatives have played a large role in shaping the regions real estate landscape. In Singapore, efforts to position the city state as a global hub in wealth management, education, biomedical as well as meetings, incentives, conventions and exhibitions (MICE) are driving demand both foreign and domestic for office space. The opening of two Integrated Resorts (IRs) in 2010 is a further step in the governments goal of building tourism as another engine of growth.
Likewise, moves in Malaysia to ease foreign residential ownership and the waiver of property tax gains have been positive for the property market. Further financial sector liberalisation will support leasing demand for offices in Kuala Lumpur. Malaysia is regarded as the worlds top Islamic financial centre and is well poised to tap on growing Islamic assets.
A return to normalcy is underway in Thailand, as the government takes to restoring business and investor confidence. Tourism has recovered strongly and contributes 6-7% of total economic activity. Much of the office stock in Bangkok is relatively old, which gives rise to the scope for further enhancement potential and rent upgrades. Foreign interest in Bangkoks residential market is also rising as policies are tightened in other neighbouring markets like China and Hong Kong.
As Vietnam opens up to foreign capital amid an improving political environment, the country will be a growing attraction for global investors going forward. Inflation continues to pose a threat, although this reflects in part the sharp growth experienced from a relatively low base. A young population, migration from rural regions and rising employment has spurred the growing residential and retail segments in Ho Chi Minh and Hanoi. Although the near term office outlook remains soft as significant supply of office space is coming online after 2011, continued inflows of expatriate professionals and corporations will help to absorb the incoming space.
Indonesia is the worlds fourth most populous country with a population of about 238 million. Its economic resilience, coupled with increasing political stability, has attracted strong Foreign Direct Investment (FDI). Moodys has also acknowledged the countrys improved economic outlook in its recent upgrade of Indonesias sovereign rating from Ba2 to Ba1. Positive fundamentals have raised interest in real estate investments in the capitol city of Jakarta. The government is also working on deregulating foreign real estate investments. When passed, this would attract more foreign capital to the city. |
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