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| JLL APAC Property Market Report for 2nd Half of 2019 |
By 2027. it is expected that the Asia Pacific Region's urban population will exceed 400 million people
In the next 10 years, the population of people aged 65 and above will increase by 146 million. Asia Pacific's E-Commerce Market is projected to grow to USD 1.6 trillion. Rapid Urbanization coupled with the strong demographics of the Asia Pacific and its demand for alternative types of real estate assets factors are thereby creating trends that are impacting the current real estate industry of the region.
JLL has determined that capital allocations to real estate are rising, and to keep yields up, investors are considering varied strategies and diversifying portfolios. JLL is increasingly helping investors develop strategies in alternative real estate sectors to achieve long term growth.
The Asia Pacific Region's increasing and aging urban population have seen a growing demand for alternative residential arrangements, including student accommodation, co-living, family nursing homes, and aged care. With the Asia Pacific Region leading global E-Commerce to establish their data storage infrastructure as well as warehousing facilities for retail goods, the robust rate of consumption is driving increasing investor interest into data centers and logistics in the region.
Corporate demand for flexible workspaces has steadily increased in the region as the focus on building human experiences has been proven to foster innovation among employees. Talent and technology drive corporate real estate strategies, with many of the world's largest technology and financial companies reviewing their expansion strategies in the search for affordable but high quality and educated talents.
Companies are also leveraging workspaces as a key differentiator to attract and retain top talent. As corporates start to recognize how important employer engagement is in driving productivity and business goals, workplaces that offer modern up to date technology, human-centric and personalized space offerings will stand out in the war for talents.
JLL believes that Proptech-the convergence of real estate and technology will transform the way we live, work and play. It improves transparency, efficiency, and productivity across all facets of the real estate sector.
Property technology takes into account attitudes, movements and transactions which leads to the development of technologically innovative products and/or new business models for the commercial side as well as the construction side of the real estate industry, and even for buildings and cities of the future.
Start-ups in Asia-Pacific have received more than 60% of total global proptech investment Of US$7.8 billion from 2013 to 2017, which amounts to US$4.8 billion worth of funding. In 2018, that figure came up to almost US$20 billion. This significant investment goes to show that proptech here is catching UP fast and presents incredible opportunities that lie ahead for the real estate industry
The development of Proptech along with the rapid increase in urbanization has spurred smart city initiatives across the globe.
JLL defines a smart city as a set of policies and strategies using technology and data to deliver initiatives that improve inclusiveness, services and quality of life for the people who live there; drive efficiency. sustainability and improved decision-making for government; and, create a transparent, efficient and competitive environment for businesses.
Innovation in smart cities is about more than technology. Cities are increasingly embracing collaboration with other cities and the technology vendor ecosystem to help drive innovation. For example, the Association of Southeast Asian Nations (ASEAN), a group of 10 member countries that encourages political, economic and social cooperation across the Southeast Asian Region, launched the ASEAN Smart Cities Network (ASCN) which brings together 26 pilot cities working towards the common goal of smart and sustainable urban development. Best practice sharing will allow the cities in the network to set up their initiatives efficiently, share learnings, and identify new and innovative use cases. This in tum will deliver a higher quality of life for citizens, a competitive economy and a sustainable environment. This ASEAN collaboration will bring many opportunities for the real estate industries of ASEAN member countries including the Philippines.
JLL also indicated that the May 2019 elections set President Duterte up for another strong three years with potential for corporate tax cuts that should further encourage investment.
Foreign direct investments (FDI) approvals doubled in 2019 compared to a year ago and consumer demand accelerated to 6.3% YOY in IQ19, up from 5.6% in 2018.
In Metro Manila, the supply of office, residential, retail, and hospitality property continues to increase as demands for real estate remains high from Offshoring and Outsourcing (0&0) firms and online gambling companies. Retail property is expected to increase by an additional 673, 500 sqm by the end of 2022. An average vacancy is around 3% for the retail property market with F&B brands, to fast fashion brands and several skincare brands leading retail demand. The hospitality sector is expected to bring additional 4,757 rooms to the market. occupancy rates are strong as casino gamers, businesses, mice events, and government drive demand.
The Cavite, Laguna, and Batangas (CALABA) industrial property markets are expected to add about 40ha of industrial land. The overall average occupancy rate of industrial parks in Cavite, Laguna, and Batangas is at as Of 1 HI 9 and is expected to soar. The further development of various infrastructure projects that will link Cavite, Laguna, and Batangas to neighboring areas, especially Metro Manila is expected to attract more foreign investments, taking advantage of an improving transportation system and increasing land value. The significant growth of E-commerce has reinvigorated the logistics industry which drives demand for industrial space (i.e. Warehouse space) Amid the increasing requirement of locators for distribUti0n centers. The manufacturing sector has also recently gained its strength and, in fact, outperformed other ASEAN countries.
In Metro Cebu, 0&0 firms, online gaming and English as second language schools drive demand for office space. The Metro Cebu residential leasing market is driven by high salaried employees while the residential selling market is dominated by investors over end-users. Metro Cebu continues to be the largest retail hub outside Metro Manila. There, the hospitality property market is driven by MICE market and tourists.
In Davao City, the office property market is driven by 0&0 expansion while the residential property market is driven by local HNWIS, OFW and leasing activities from local and foreign students. The main demand drivers of the Davao retail property market are an expansion from the local brands and locators with existing operations in Davao City. MICE business travelers and local tourists are the main demand drivers. Just like Cebu, supply in Davao across all property markets continues to grow as developers fulfill demand.
The future looks bright for the Asia Pacific Real Estate Industry. There are many lucrative opportunities on offer for innovative real estate stakeholders. corporations, and investors. JLL is excited to guide its clients towards investing in the Asia Pacific Region and looks forward to being active players in the Asia Pacific real estate industry- touted as the fastest growing and most dynamic market in the world.