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Global Investors Rush Into Southeast Asia Property Market Featured

Southeast Asia property market are attracting investors worldwide, as the growth prospects for the region's economies glow brighter on the ongoing global economic recovery and growth in the region, which increase liquidity and reduce debt, according to Jones Lang LaSalle.

ASEAN economies continue to outpace the rest of the world by a significant margin. While Singapore remains the commercial and financial hub, emerging markets are making headway across the region.

Despite a slight slowdown during the first quarter of this year in some Southeast Asia markets, such as Indonesia and Thailand, economies across the region anticipate growth for the remainder of the year.

Supported by strong investor demand and consumer spending, Indonesia's economy is forecasted to grow 6.1 per cent in 2013.

The Philippines is expected to grow 5.7 per cent this year, driven by investor interest in the country's upgrades to sovereign credit ratings and low interest.

Thailand, Malaysia and Vietnam are expected to grow 4.5-5.5 per cent, driven by strong domestic demand.

Chris Fossick, managing director of Singapore and Southeast Asia for Jones Lang LaSalle, said yesterday that this growth translates into robust domestic investment into commercial property, driving demand for office and logistics space.

Increased consumer spending will boost demand for expanded retail formats, which in turn will support the development of retail malls and the accompanying infrastructure in emerging markets.

"We are now starting to see increased transparency in the real estate markets of these economies, which will ultimately spur regional growth encouraging investment.

"As a result, the real estate industry is in a unique position to influence and be involved in many key aspects of development in the Southeast Asia region, both economic and social. There is a role for the industry in areas such as infrastructure, housing, education, healthcare, tourism and industry and trade, which are all inextricably linked.

"This is both an opportunity and a challenge for our industry and we need to work closely with both private and public enterprise to ensure real estate adds full value," he said.

While economic growth drives corporate activity across the region, businesses are making changes to accommodate growing workforces and modernised office spaces in new, emerging markets. While existing companies seek space to accommodate expansion and new businesses and industries demand a share in the markets, demand for offices will spike and vacancy levels are forecasted to reach historic lows by next year.

Demonstrating this growth is Jakarta, where office demand has increased by nearly 150 per cent in four years, growing 7.4 per cent the last quarter alone.

The Philippines, often overlooked by investors, witnessed record levels in demand for office space, sparking new developments in previously unexplored submarkets and a 3-per-cent rise in rents from the same period in 2012.

Backed by increased domestic demand, office market rents and capital values, Thailand's real estate market has demonstrated recovery since the end of 2012, rising 15.2 per cent year over year in the first quarter of this year. Meanwhile increases of 1-4 per cent in office rents were seen in some other emerging markets in the region, such as Kuala Lumpur and Bangkok.

Thanks to improvements in economies and international trade, ASEAN industrial and logistics markets have reached historic highs and show no signs of slowing, as trade volumes are predicted to increase by 130 per cent over the next 10 years.

Jakarta leads the regional field in the retail market, supported by a large population. As rising disposable income and a changing demographic drive consumer confidence, retail rents have accelerated by 4.9 per cent year over year in the first quarter.

In Thailand, the local retail market also enjoyed renewed interest from international retail brands looking to capitalise on resilient domestic demand and overall rising affluence in Asia. Leasing activity was strong, largely driven by newcomers and expansions by international brands with retail rents in Bangkok growing 4.1 per cent year over year and capital values rising by 3.4 per cent year over year in the first quarter.

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