Investors see Southeast Asia’s young population driving property market recovery after pandemic

Property markets in Southeast Asia, one of the worst-hit by the Covid-19 pandemic, are poised to recover as the global economy gradually opens up

Mitbana, a joint venture between Mitsubishi and Temasek-owned Surbana Jurong, is investing US$500 million in the region in the next five years

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Jakarta’s central business district is seen during dusk. Developers are betting on the country’s young population to drive the property market recovery. Photo: AP Photo

Published: 9:30am, 20 Oct 2021Updated: 4:33pm, 21 Oct 2021

Property markets in Southeast Asia, one of the worst-hit by the Covid-19 pandemic, are poised to recover as countries across the world gradually open up in the coming months, according to analysts and investors. Much of that recovery will be driven by the region’s young population, they said.

Office rents across Southeast Asia declined between 8 and 10 per cent in the first quarter, while luxury home prices remained flat, according to Knight Frank. In Asia-Pacific, office rents fell 7 per cent while luxury property prices increased by an average of 6 per cent, the consultancy noted.

“With the damage wreaked by the pandemic, Southeast Asia, apart from Singapore, for now might not look too pretty as an investment destination,” said Christine Li, head of research for Asia-Pacific at Knight Frank. “However, its young population, sustained urbanisation rate and growing middle class are long-term fundamentals that will outlive the pandemic.”

Asean, which comprises 10 Southeast Asian countries, has seen its population nearly double to 656 million in 2019 from 355.3 million in 1980. More than half of the Association of Southeast Asian Nations’ population will be aged 34 and below by 2030, according to a report by United Overseas Bank.

An artist’s rendition of Mitbana’s project in Jakarta. Photo: Handout

The bloc is also an economic powerhouse. Asean’s economic output totalled US$3.2 in 2019, making it the fifth largest economy in the world after the US, China, Japan and Germany, according to the International Monetary Fund.