Demand set to increase in key South-East Asian real estate markets in 2017

February, 2017 by

Developers from China, Indonesia, Thailand and the Philippines are expected to reinvigorate the Malaysian property market in 2017, expatriate Filipino workers will drive real estate in the Philippines, and anti-corruption measures in Indonesia will boost that nation’s market, writes Michael Geh, Senior Partner of Raine & Horne International Zaki + Partners Sdn Bhd

Michael Geh, Senior Partner of Raine & Horne International Zaki + Partners Sdn Bhd

Michael Geh, Senior Partner of Raine & Horne International Zaki + Partners Sdn Bhd

Malaysia

About 47% of the population of Malaysia, or 14.3 million people, are aged between 20 and 49, and these people are seeking to buy their first homes. Therefore, the demand for starter homes will be high in 2017, yet Bank Negara Malaysia is expected to maintain its strict credit rulings because of Malaysia’s high household debts.

The government’s Perumahan Rakyat 1Malaysia (PR1MA) units and affordable housing built by private developers have only seen a 50% take-up, because many potential homebuyers were unable to obtain housing loans. We expect to see international developers coming into the Malaysian market to take advantage of PR1MA, and we will see mergers and acquisitions among local developers.

Philippines

Families of the 2.4 million Filipinos working overseas are expected to drive demand for real estate in the Philippines. These overseas workers earn monthly salaries of US$1,800 to US$3,000. Each month, they send money back to their families, who then invest it in property. This strong demand for housing has forged a robust construction and housing boom in the Philippines.

Indonesia

The Indonesian government’s efforts to rid the country of corruption are having a major impact on the nation’s real estate markets.

In the past 10 years, Indonesia’s Corruption Eradication Commission has created more transparency at the federal and provincial government levels. In addition, a broad tax amnesty has seen huge amounts of cash being pumped back into Indonesia from the Singapore banking system and other offshore tax havens. This cash is being converted into property assets by investors searching for yields and returns. Thus, 2017 will be a boom year for the property industry in Indonesia.

New laws are expected to be introduced this year allowing foreigners to take up ‘30 years plus 30 years’ of leasehold stratified properties such as condos and apartments in certain locations. The government has also launched a campaign to invite international investors to Indonesia. It wants investors to live, work and set up businesses there.

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