SOUTHEAST Asia is seen emerging as a major driver of global growth that will push the region’s potential in corporate real estate.
The Asean Economic Community (AEC) promises to open up markets making the bloc an attractive destination for investments and expanding business potential in the region, CoreNet Global, the international association of corporate real estate (CRE) and workplace professionals, service providers and economic developers said.
This would bolster growth opportunities for corporate real estate with more interest from small and medium-sized enterprises and multinational corporations.
With a combined gross domestic product (GDP) of $2.5 trillion in 2014, Asean or the Association of Southeast Asian Nations now has the third-largest GDP in Asia, after China and Japan, making it the seventh-largest economy in the world.
This landscape of opportunity has sparked interest among foreign investors seeking to capitalize on the lower trade barriers and higher trade flows that give them access to other larger markets, according to CoreNet Global.
Surpassing China, the region attracted a total of $111.8 billion in foreign direct investment (FDI) in 2014. Singapore attracted the lion’s share of $67.6 billion, followed by Thailand at $10.9 billion, Indonesia at $8.8 billion, Malaysia at $7.9 billion, and Vietnam at $7.7 billion, according to Asean statistics.
One of the key drivers in this growth is the low-cost labor in Cambodia, Indonesia, Laos, Myanmar, and Vietnam and the large consumer market that makes Asean attractive for both domestic and international manufacturers.
Within the region, Singapore, Malaysia, Indonesia, Philippines, Vietnam and Thailand are considered as notable targets for companies to meet their business needs, CoreNet Global said.
According to CoreNet Global, the Philippines is getting a bigger share of back office and call center jobs over India due to its lower cost base, good infrastructure and high quality workforce. “The Philippines is an attractive location for its strong domestic demand and political stability. The country also has seen growth across a variety of other industries such as pharmaceuticals, banking and business services.”
Singapore, being the most advanced Asean economy, serves as the regional gateway where many corporates set up their regional headquarters to expand their network of R&D, manufacturing, logistics and back office support throughout the broader region.
According to the World Bank, Singapore continues to hold on to its decade-long position as the most business-friendly destination in the region.
“While there remains some nationalist protectionism, the AEC template and guidelines are there to ensure that the whole of ASEAN moves forward as a stronger economic region,” Desmond Sim, head of CBRE Southeast Asia Research, said.