Investors need to look beyond first-tier cities and at new types of assets to make profits, including emerging markets such as Việt Nam, as the Asian property market slows.
This was stated in a report on real estate tips for the Asia-Pacific market 2017, released by Savills Việt Nam on March 3.
Savills said in Việt Nam, a core area is the office segment in HCM City. HCM City is one of the hottest performing office markets in the region, with Q4, 2016 occupancy at 97 per cent. Strong demand continues as occupiers move up the quality chain and ensure the FIRE (Finance, Insurance and Real Estate) sectors increase their requirements for contemporary buildings.
For the education sector, as the middle class expands, there is greater demand for more refined educational needs within Việt Nam. There is an array of existing offers, however the industry is dynamic and will change based on the country’s orientation. One can expect co-location near burgeoning startups.
Meanwhile, investors would also see opportunities in the logistics sector, Savills said. The dynamic retail industry is being challenged by successful online retailers. Effective warehouse and logistics locations to provide efficient supply chain and last mile delivery will be critical.
Savills also said with its huge scale and diversity, Asia encompasses some of the world’s most sophisticated real estate markets, alongside emerging economies with very little investable real estate.
Some real estate sectors in Asia barely noticed the 2008 financial crisis. Real Australian residential property prices, for example, saw continuous growth – capital values in cities throughout the region have reached record levels in recent years.
Cities such as Singapore may still have some scope to squeeze more before capital values peak.
Investors will be wondering where to place emerging markets such as Việt Nam, Malaysia, the Philippines and Indonesia on the risk and yield curve.
The long-term success of many new and emerging markets in the region will depend on them being able to offer the same tradability, openness and transparency for investors that the core gateway cities currently provide.