Asean integration to benefit logistics and office markets in region
Single market will benefit industrial sectors of member nations and ramp up demand for retail and office space in the short to medium term
The establishment of the Association of South East Nations (Asean) as a single market by the end of this year will immediately benefit the industrial sectors of member countries, with some positive spill over for the office and retail markets.
In a recent research report, CBRE expects a ramp up in the demand and supply of industrial and office space in most Asean markets in the short to medium term, as more small and medium-sized enterprises (SMEs) and multinational corporations establish themselves in the region. In particular, the logistics market is expected to grow and develop in Asean, given the strong emphasis under the Asean Economic Community (AEC) blueprint for infrastructure development and the gradual elimination of non-tariff barriers across member countries.
The lift in the industrial market will subsequently bolster the growth in office demand as more multinationals enter the market and more regional SMEs expand. The financial and legal services sectors in emerging markets could grow on the back of rising infrastructure development and the proposed liberalisation of the region's capital markets.
More foreign retailers are also projected to venture into Asean, building on the momentum they have charted in the last few years.
Tourism is a bright spot for Asean member countries as the AEC blueprint focuses on enhancing air and land transport infrastructure and regional cooperation to attract more visitors to the region.
Meanwhile, there are some hurdles and limitations to overcome, and the impediments to growth are varied. There is a possibility of an ill-managed institutional supply pipeline, which may result in volatility in retail rents. This could delay or even discourage retailers from expanding.
The undersupply of skilled labour also poses a challenge for the office and industrial sectors in the short-to-medium term, which might hamper the expansion of high-value industrial manufacturers. The disparity in the skill sets between countries also limits the positive effects of the proposed free flow of skilled labour within Asean.