JLL SEA 2018 Outlook 19 February 2018
This note highlights the key investment themes for 2018:
- 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.
- 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.
- Residential prices could surprise on the upside in Singapore, Kuala Lumpur and Ho Chi Minh City.
- 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.
- 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.
- 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.
- 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.
- 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.
