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Singapore 'will be top urban real estate market in Asean, regardless of Obor'

Singapore

THE recent cancellations of several mega-projects in Malaysia, including the high-speed rail connecting Kuala Lumpur and Singapore, and the China-backed East Coast Rail Link, have not derailed China's One Belt, One Road (Obor) project.

This is according to a research report by Andrew Haskins, Colliers International's executive director of research, released on Thursday.

The massive Obor initiative, which aims to connect over 60 countries through the Silk Road Economic Belt (by land) and the 21st Century Maritime Silk Road (by sea), will still be beneficial to the investment sector of many countries in South-east Asia, said Colliers.

According to the report, Singapore's urban real estate market is predicted to remain buoyant in 2018, with 10-12 per cent growth in premium and grade-A office rents.

"As South-east Asia's financial and logistics hub, Singapore is the top urban real estate market in the Asean region. Singapore is likely to retain this position for many years regardless of the success of Obor," wrote Mr Haskins.

"If Obor results in continued long-run Chinese infrastructure investment in other South-east Asian countries (even if Malaysia is not among them), Singapore will be the natural location for the regional headquarters of Chinese enterprises."

The Obor project will also promote investment in emerging markets such as Indonesia, Vietnam and the Philippines.

The report highlighted the oversupply of offices in Jakarta, which presents the opportunity to invest in office buildings at distressed prices.

It also identified Vietnam's young population and rising household income, which increase apartment developments and factory relocations.

The Philippines has these major investment opportunities: the residential market and townships outside Metro Manila, the industrial park developments north of Luzon, and resort-oriented hotels across the country.

Ironically, Malaysia, which might not be a part of the Obor project, is indicated to be the most popular among Chinese investors, he noted.

Malaysia is the second-least populated country in South-east Asia, after Singapore. Its predicted real GDP for 2020, which indicates long-run GDP growth prospects, is 4.1 per cent.

This is higher than that of Singapore and Thailand, but still inferior to Indonesia (5.4 per cent), Vietnam (5.6 per cent) and the Philippines (6.2 per cent).

"It is possible that the Malaysian government will revisit the railway plans in the future," said Mr Haskins.

"In any case, we think that countries in South-east Asia besides Malaysia, including Singapore, Indonesia, the Philippines and Vietnam, still offer good prospects for property investment and development.

"Over time, we believe that Obor will accentuate existing opportunities in these countries, especially in industrial and residential property."