The local logistics and office sectors are set to get a boost from infrastructure spending spurred on by the upcoming Asean Economic Community (AEC), a report has predicted.
As Asean nations move towards integration into a single AEC market later this year under a blueprint emphasising infrastructure development, the industrial sector is set to be "the most immediate beneficiary", said real estate consultancy CBRE in the report released yesterday. "The China slowdown will be a dampener. However, we believe that the positive effects of the AEC are still present," said Mr Desmond Sim, CBRE research head for Singapore and South-east Asia.
China was Asean's top real estate investor in the last five years, accounting for 29 per cent of total investment volume, said the report.
Singapore was a close second, as the source of 28 per cent of total investments. CBRE expects demand and supply of industrial and office space in most Asean markets to pick up in the short to medium term as more small and medium-sized enterprises expand regionally while multinationals enter the market.
"Singapore can continue to be the regional headquarters or flagships for these multinationals despite the maturity of the market," Mr Sim said.
More foreign retailers are expected to venture into Asean, said the report, which cited tourism as another bright spot since the AEC blueprint focuses on enhancing air and land transport infrastructure and regional cooperation to attract more visitors to the region. The report also flagged potential "limiting factors" on growth. Volatility in retail rents arising from "ill-managed supply pipelines" could delay or even deter retailers from expanding, it said.
The lack of complementary real estate investment policies to promote free flow of capital - such as restrictions on foreign land ownership and short lease durations - could also mute foreign investors' participation, said the report.