Indonesia named most efficient emerging market in Asia-Pacific
July 25, 2014 - Indonesia
Indonesia leads the Asia-Pacific region as the most efficient and transparent developing commercial real estate market, says New York-based real estate brokerage and consulting firm Cushman and Wakefield.
According to its 2014 Emerging and Frontier Markets report, which studied 42 emerging and frontier markets around the world, Indonesia performed well in several key areas, including the ease of leasing properties and the level of bureaucracy, in line with the country’s advancing economy.
Demand for commercial real estate space in Indonesia, which is in fifth place overall, has been generally positive, even when the market was in a “wait-and-see” mode as the country conducted its general elections, although the high supply of office property could dampen the growth of the rental segment, especially in Jakarta’s central business district, where occupancy is expected to remain at 90 percent.
Indonesia is the only Asia-Pacific nation to make the top ten. Other emerging Southeast Asian countries, namely Thailand, the Philippines, Vietnam and Myanmar, are ranked in 11th, 14th, 25th and 40th places, respectively.
In Thailand, rental rates continue to increase due to strong demand and limited supply of prime properties with access to the BTS and MRT lines, which make the daily commute of city workers and visitors easier.
Many building owners have also started refurbishing their assets to attract tenants as Bangkok prepares for the ASEAN Economic Community next year.
Ranking third in the region, the Philippines “scores well in a number of the property related parameters with bureaucracy levels making business relatively easy to undertake.”
Leasing office properties in the country remains one of the least expensive in the world, according to the report, and improvements in infrastructure should fuel development activity beyond Metro Manila.
Analysts are cautious about emerging markets, where the risk is generally higher than in established real estate markets, mainly due to political instability, corruption and safety concerns.
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