Savills Prospects January, 2024: The Year Ahead in Emerging Markets, a New Capital in Indonesia, and More
Savills Prospects turns a spotlight on the emerging trends that will have the most impact for real estate investors in Asia Pacific in 2024.
As 2024 gets underway, several economic and political trends and events loom on the horizon. Each has the potential to have a major impact on real estate markets. Savills Prospects investigates what some of these trends could mean for investors across the region.
Building the Future: What will Indonesia’s New Capital Mean for Real Estate Investors?
Construction is underway for Indonesia’s new capital at Nusantara in East Kalimantan. The US$35 billion project on Borneo is expected to relieve traffic and pollution in Jakarta. In addition, it should address skewed investment patterns across the country. Early phases will focus on government offices and residential space. Later phases will include mixed-use developments, schools, hospitals, more infrastructure and additional housing. By 2029 the new city should have a population of 1.2 million, 1.9 million by 2040 and carbon neutrality by 2045. Nonetheless, critical overseas investment remains absent, despite interest from China, Japan and Singapore. The February election has put investors in a wait-and-see position. Further to that, questions linger about the impact Nusantara will have on Jakarta.
Asia Pacific Student Housing Sparks Investor Interest
With the emergence of the post-pandemic world, students worldwide have returned to class. On top fo that, student numbers are rising. European investment into purpose-built student accommodation (PBSA) will top €12 billion in the coming years. As APAC investors seek resilient sectors with operational elements, PBSA has emerged as a growth sector. At present, the strongest opportunities are located in Australia and India.
Australia is set to welcome 300,000 international students in 2025. The country currently has 79,000 PBSA beds available and a 1% vacancy rate. India has a domestic student market of roughly 40 million in tertiary education. Its PBSA rental sector posted 10% growth over the last two years. With high demand, a secure tenant pool and potential AI optimisation, PBSA is among APAC’s most robust sectors.
Go West: Asian Manufacturers Expand to Mexico
The pandemic turned a spotlight on nearshoring around the world. Chinese manufacturers are also seeking resilient supply chains, cost savings and access to key export markets. In APAC, Vietnam is just one destination for manufacturers seeking alternatives to China’s high costs. The trend in turn drove growth in industrial and logistics development there. Now, Mexico is emerging as a similarly strategic market. It offers lower wages, a large labour force and proximity to the US. Chinese manufacturers have sparked an industrial and logistics sector boom as demand for facilities rises. They are not alone. Japanese and South Korean manufacturers also operate in Mexico.
The 2024 Outlook: China, India and Developing Asia
Savills experts continue regional forecasts with an exploration of what’s in store for emerging markets. Despite shaky macroeconomic and political factors, there are positives in APAC for 2024. The possible easing of tensions between the US and China is inspiring investor confidence. China’s multi-family sector and policy support for tourism and retail services present strong opportunities. In India, alternative assets sit alongside its office markets as exciting sectors for 2024. Assets that focus on ESG compliance and new micro-REITs also present investment potential.
Author: Simon Smith
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