Technology a positive for Asean real estate, infrastructure, JLL says

Ahead of the World Economic Forum on Asean in Kuala Lumpur tomorrow and Thursday, JLL has released a report looking at how advanced digital technologies could affect countries in the Asean Economic Community (AEC).

“In many ways, new technologies will allow people to bypass current constraints and leapfrog into greater efficiency,” said Chris Fossick, JLL managing director for Singapore and Southeast Asia. 

“The impact on real estate and infrastructure in Southeast Asia is likely to be positive and transformational. If harnessed effectively, the changes will bring improved productivity, income levels and quality of life to the population.”

Southeast Asian economies are forecast to grow by 5 per cent annually until 2020, exceeding expected global growth of 3.5 per cent. The urban populations in Southeast Asia’s cities are growing by 2.2 per cent on average annually and the middle-income population is set to increase by 70 million to 194 million by 2020.

JLL said that in the sphere of work, demand for office space would change because of greater outsourcing from developed markets, more flexible work practices, and an increase in co-sharing spaces.

“While growth in demand for office space slowed after the global financial crisis, Southeast Asia has bucked the trend, with demand expected to grow at 6 per cent per year until 2020 due to economic growth, further acceleration of outsourcing from developed markets, and the rise of the middle class,” , said Regina Lim, JLL national director of advisory and research for capital markets and the author of the report. 

“In particular, we anticipate strong growth in demand for office space in Manila and Kuala Lumpur.”

The report said traditional corporate occupiers might be giving way to new models of working.

“While automation and artificial intelligence will eliminate some jobs, new jobs are likely to be created,” Lim said. “Adoption of flexible working will continue to rise and by 2030 co-working spaces could make up 10 to 15 per cent of office stock in Southeast Asia, compared [with] only 1 to 5 per cent today.” 

Despite relatively low rates of personal-computer ownership and Internet connectivity, online shopping penetration is higher in Southeast Asia than in developed markets such as the United States and Britain. In fact, 50 to 80 per cent of consumers in Southeast Asia living outside cities are bypassing PCs to use mobile phones to shop online. 

But rather than negating the need for bricks-and-mortar shops, JLL’s research suggests this trend will drive online retailers to expand into physical stores as more consumers choose to “click and collect” purchases and test products in store.

In terms of accommodation, the report found home-sharing platforms such as Airbnb and Homeaway would affect both residential and hotel real estate in Southeast Asia. These platforms raise the efficiency with which property is used, freeing up spare capacity such as second homes. 

Thus there could be a reduction in the number of hotel rooms and residential apartments needed to accommodate the same number of visitors.