The draw of S-E Asian markets | Singapore

Business Times: Tue, Jul 05

SINGAPORE-BASED property groups are increasingly looking to South-east Asian markets such as Malaysia, Indonesia, Vietnam and the Philippines as they seek to expand their portfolios.

While the two largest developing Asian economies of China and India are still foremost on developers’ and consultants’ minds, they think that population growth will drive demand for their services in South-east Asia as well over the next few years.

‘The economic rise of Asia goes beyond the emergence of China and India as economic powerhouses. Asean is a major contributor to Asia’s growth and has made significant progress towards economic integration and growth,’ said Loh Wai Keong, chief executive of Ascendas South-east Asia.

‘The South-east Asian markets such as Malaysia, the Philippines, Vietnam and increasingly Indonesia offer potential for rapid growth to businesses with the right skills and preparation.’

He identified Vietnam as a country with high growth potential, and also said that his company is now studying the Indonesian market ‘closely’.

Beyond Singapore, Ascendas’ property portfolio in South-east Asia includes ACCRALAW Tower and Carmelray Industrial Park II in the Philippines, Ascendas Logistics Hub in Subang Jaya in Malaysia, and the Ascendas-Protrade Singapore Tech Park in Binh Duong, Vietnam.

The company also manages the $200 million Ascendas Asean Business Space Fund, which invests in a mix of development and completed business space assets in the Asean region – particularly Malaysia, the Philippines and Vietnam.

Nina Yang, executive director of CPG Consultants, expects demand for the group’s urban planning services across South-east Asia to grow as the rate of urbanisation increases.

By 2050, the world’s population will grow by another one billion. About two-thirds of this growth is expected to come from Asia, said Mrs Yang. She also noted that currently, about 1.6 billion people live in cities across Asia and that this figure will grow to 2.5 billion by 2050.

‘This works out to a stunning rate of an increase of 120,000 city population a day, and translates to a mind-boggling 140 Singapore to be built in 40 years – or 3.5 Singapore every year,’ said Mrs Yang. ‘Hence, there is certainly potential for more work in South-east Asia.’

CPG Consultants recently completed the master plan for a 214-hectare residential and commercial site in Phu Ly city, the capital of Ha Nam Province in Vietnam. Construction of the development will begin soon.

Industry players are keen to expand further in South-east Asia as these markets allow them to export their integrated planning approach – whether for designing master plans or developing business parks and space – with some ease.

Singapore-based companies have wide networks across South-east Asia. This makes the process of setting up office and expanding in neighbouring countries faster and more convenient.

In addition, there is increasing interest from international players when it comes to expanding into South-east Asia, which provides more opportunities for property groups.

‘We see exciting opportunities to deepen our presence in our existing markets in the Asean region, and diversify our portfolio,’ said Ascendas’ Mr Loh. ‘There is certainly demand for quality business space, especially in the developing economies of South-east Asia, where there is increasing interest from international players to expand here.’

Ascendas can leverage on its expertise and networks to provide integrated developments and solutions to meet the needs of its customers, he added.

Another factor in property groups’ favour is their reputation for providing cost-effective solutions, which local authorities place an emphasis on.

Singapore-based companies have built up a strong track record in providing cost-effective business space solutions, said Tham Poh Cheong, group director for infrastructure, environment and engineering at International Enterprise (IE) Singapore.

This approach is a result of the Singapore experience, he said. ‘Faced with resource constraints, Singapore took on a long-term integrated planning approach for our development, which considers economic needs and environmental sustainability to create commercial solutions,’ Mr Tham explained

Green developments

CPG Consultants’ Mrs Yang, for example, said her firm is always aware of the need to balance the more ‘noble’ long-term objectives of urban planning with the immediate financial returns of real estate development.

‘As architects and planners, we will have to develop the ability to deal with such conflicting requirements creatively,’ she said.

‘It also means that planning has to be approached in a much more multi-disciplinary manner, involving not only engineering disciplines but a whole host of experts familiar with the workings of the financial and property markets.’

Other than being cost-effective, Singaporean property groups also have an edge when it comes to sustainable building.

Keppel Land, for example, has raised the bar for green developments in Indonesia with its Jakarta Garden City, which this year became the first residential development in the country to be conferred a Green Mark Gold Award by Singapore’s Building and Construction Authority (BCA).

Jakarta Garden City, spanning 270 hectares in East Jakarta, is expected to yield about 7,000 landed homes and apartments complemented by retail malls, entertainment centres, offices, schools and other facilities. The green mark certification for Jakarta Garden City was conferred to the first phase of the development, which comprises 875 landed homes.

‘With rapid urbanisation and environmental concerns, Indonesians are becoming more eco-conscious and seek homes which can achieve energy and cost savings while benefiting the environment at the same time,’ said Lim Seng Bin, president director of the Keppel Land-led joint venture company behind Jakarta Garden City.

But industry players cited the different legislative and administrative frameworks in various countries as one hurdle they often have to work to overcome.

‘As our clients are often planning bureaus and government agencies, we have to face such realities in the physical master plan that we develop,’ said CPG’s Mrs Yang.

‘We often have to devise planning solutions to help our clients deal with implementation within the constraints of their own local legislative and administration framework. Our master plans have to progress beyond eye-catching images, underpinned by good planning strategies.’

The key objective is to understand the market, study the environment and work out business space solutions that are not only relevant to the city, but those that are also sustainable and viable in the long term, industry players said.

Source: Business Times © Singapore Press Holdings Ltd

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