in the services sector will drive more investment in real estate in the Asia Pacific, a real estate services firm said on Wednesday.
According to the “Changing Places” report by Jones Lang Lasalle, more employment as the economy grows will create demand for commercial real estate.
“Many millions of future service sector workers will work in offices and shop in malls,” JLL said.
Citing data from the World Bank, JLL noted the service sector accounts for an average 55 percent of the total employment across 15 major Asia Pacific countries. “This is largely in line with the sector’s average share of a country’s GDP (58 percent).”
In the Philippines, the service sector accounted for more than half or 55.3 percent of the labor force as of July 2016.
JLL is forecasting a rise in service sector employment in the Philippines and other Southeast Asian countries.
“Indonesia, Philippines, Vietnam and Malaysia together may be able to deliver twice the number of service sector jobs as China in the next decade,” JLL noted. “The Philippines is spearheading development with robust growth in the global offshore services market.”
Oxford Economics predicts as well that India will create a total of 80 million new jobs over the next decade – comprising almost 60 percent of the region’s total employment growth. About half of the expected jobs will be in the services sector.
JLL noted that the IT industry in India, which is part of the services sector, currently accounts for 50-60 percent of occupied Grade A office space in country’s Tier I cities.
The service sector is also seen to influence the demand for malls, driven by higher spending of those employed by the industry.
“Rising middle class and the entry of a higher number of foreign brands also spur the construction of quality malls in major cities across India and Southeast Asia,” JLL noted.
India and Southeast Asia are expected to account for up to 20 percent and 15 percent, respectively, of the region’s commercial real estate in the coming years.
“An array of quality office and retail assets currently under construction across emerging Asia will provide investors with a wide selection of both locations and property type,” JLL said.