Restrictive ownership policies and a lack of market transparency are some of the major hurdles facing an integrated Asean real estate sector, an industry magazine said.
Property Report based its list on an analysis by consultancy firm CBRE on the prospects of the Association of Southeast Asian Nations’ 10 member economies under the planned Asean Economic Community (AEC).
The first major problem noted was the need for more transparency in some markets, with the way business is conducted different among Asean states.
“While it’s generally transparent and relatively easy to do business in Singapore and Malaysia, other countries like Myanmar, Laos and Cambodia have a lot of catching up to do in terms of creating a more conducive environment for businesses,” the magazine said.
There is also a possibility of an improperly managed institutional supply pipeline, which has the potential to make retail rents volatile and could delay or even deter retailers from expanding.
“The undersupply of skilled labor also poses a challenge for the office and industrial sectors in the short to medium term, which might in turn hamper the expansion of high-value industrial manufacturers. The disparity in the skill sets between countries also limits the positive effects of the proposed free flow of skilled labor within Asean.”
Another challenge is the lack of complementary real estate policies that will encourage investment and the free flow of capital.
“Restrictions on foreign land ownership and short lease durations in many of the member states deter real estate investors from making purchases in the region,” noted the property report.
CBRE suggested that the implementation of a pro-investment environment would be necessary to encourage further foreign direct investments and to improve Asean’s overall development process.
It proposed that a “a review of the individual country’s land ownership policy for acquisition purposes may be necessary to allow more foreigners to participate in real estate development.”
CBRE research head for Singapore and Southeast Asia Desmond Sim said he remained optimistic despite the issues facing the region’s property sector.
“While there exist hurdles and limitations that Asean needs to overcome, the region is still anticipated to remain an attractive proposition for businesses and commercial real estate with the implementation of the AEC serving to strengthen Asean’s development, ” Sim said.