JLL SEA 2018 Outlook

This note highlights the key investment themes for 2018:

1. Economic growth accelerates, appreciating currencies: The Malaysian and Indonesian economies grew faster than expected in 2017 and we expect more positive surprises from these countries in 2018.
2. We expect a strong recovery in office markets in Singapore, Jakarta: Rents fell 20-30% over last three years, but expected to increase 10-25% over next three years. 
3. Residential prices could surprise on the upside in Singapore, Kuala Lumpur and Ho Chi Minh City.
4. Infrastructure spending accelerates in Malaysia and Indonesia: We expect the infrastructure projects, some of which are part of China’s Belt and Road Initiative, to support employment and growth.
5. Monetary policies expected to stay neutral-toaccommodative, supportive of growth: While advanced economies are wound down monetary easing in 2017, Southeast Asian governments surprised the markets by cutting policy rates amid inflation in 2017 to boost growth.
6. REIT changes to expand capital sources in Southeast Asia: We expect ten new REITs and potentially the first independent REIT in Thailand over the next two years.
7. Intra-regional capital flows likely to step up: There is rising interest from Japan, China and Korea investors for Southeast Asia assets; while Philippines, Thai and Malaysian groups are seeking to invest within Southeast Asia.
8. Malaysia, Indonesia and Vietnam likely to continue to attract strongest capital inflow: In 2017, Malaysia was the top receiver of capital in Southeast Asia, with US$421million in foreign investment, followed by Vietnam and Thailand.