CAMBODIA & VALUATION TRENDS 28 SEPTEMBER 2018
BRIEF
Emerging/developing markets are on the radar for a broader base of regional investors Positive demographic fundamentals, improving socio-economic status, coupled with significant infrastructure spending - Some 600 million consumers, with rising purchasing power - Positive GDP growth across the board currently averaging around 5.2% - Robust investments and exports - Infrastructure spending GDP Growth 2018 - Philippines, Thailand, Vietnam, Cambodia >6% - Indonesia, Malaysia >5%.with continued growth in capital allocated to the real estate sector, competition to allocate funds has intensified. Real estate returns in key markets and sectors are under pressure and as a result, there is an increasing appetite for risk and a growing exodus into alternative markets and asset classes. 3
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INDONESIA Growth for 2018 expected at around 5.4% (highest in 5 years) Underpinned by: - investment growth and higher government spending - foreign investment growth - infrastructure high speed rail link, Jakarta MRT - trade surplus 6 year high Real Estate Sector: Office Recovery phase 2019-2021 Rental growth 5-10% Growth amplified for better located properties central and in proximity to LRT Capital growth in tandem with rental growth 12
MALAYSIA Moderate, albeit still healthy growth for 2018 expected at around 5-5.5% Underpinned by: - domestic demand - robust exports - FDI - public transportation infrastructure spending Real Estate Sector: Slower growth in capital values Oversupply issues in KL exacerbated by slow down in oil and gas sector Current office vacancy rate 17% Moratorium on planning approvals of major office and retail development Co-working growth 13
PHILIPPINES One of the fastest growing economies in Asia Average growth 6.3% over 5 years Expected growth 6.8% in 2018 Underpinned by: - accelerated infrastructure spending - FDI - 2 key economic pillars BPO Revenue and Tourism - Younger, literate, skilled, low cost workers Real Estate Sector: Strong fundamentals in office sector Manila CBD Prime vacancy at 3% Average rental growth 8% pa 2013-2017 14
VIETNAM Expected growth around 6.5% in 2018 Underpinned by: - strong industrial production expansion across all sectors - low costs, abundance of labour, efficient permitting process - FDI double digit growth (South Korea, Singapore, Japan, Taiwan) - Public transport infrastructure HCMC MRT, Hanoi Metro Real Estate Sector: Strong fundamentals across all sectors Office Prime vacancy at 4.7% Rental growth 7.1% q-o-q and 17.1% y-o-y Minimal supply 2018-2019. New supply 2020. 15
THAILAND Expected growth around 4.5% to 5% in 2018 Underpinned by: - Robust exports (manufacturing goods) - Tourism - Current account surplus 10.6% GDP Real Estate Sector: Office Prime vacancy at eased to 6.8% Strong absorption (14.6% y-o-y) Rental growth 3.1% y-o-y New supply 2019-2022 Retail Large middle income population - >30m Tourism 16
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SEA REAL ESTATE LANDSCAPE BRIEF
SEA EMERGING MARKETS LIMITING CHARACTERISTICS Ex Singapore Emerging/Developing Status Commercial sector typically dominated by domestic developers/investors Legacy real estate product domestically orientated, predominantly owner occupied Illiquid investment markets Infrastructure deficiencies Variations in: Foreign ownership laws mostly restrictive Land administration, title systems Legal and regulatory framework General transparency Taxation framework Political Risks 26
SINGAPORE BLUEPRINT Pro-Business Pro-Foreign Investment Political stability AAA Rating Mostly liberal real estate investment environment Diverse institutional real estate market Asset diversity Investment product diversity Liquid investment market Highly transparent 27
EMERGING SEA FUTURE DEVELOPMENT The real estate landscape will evolve further development, expansion, maturation - Regional economic growth - Growing consumer base rising middle income - Urbanisation - Younger, better educated population - Diversifying economic base Evolution of SEA markets to create a well functioning industry will require: - Greater Transparency - Institutionalisation and rationalisation of markets - Industry Professional Standards - Innovation - PropTech - Adaptability to Change 28
SEA FUTURE DEVELOPMENT Transparency Transparency Tier Global Rank Market Score High Tansparent Semi Low 2 Australia 1.32 7 New Zealand 1.59 Singapore, HK, Japan on the verge of "Highly Transparent" 12 Singapore 1.97 13 Hong Kong 1.97 14 Japan 1.98 26 Taiwan 2.32 30 Malaysia 2.57 31 South Korea 2.6 Singapore, HK, Japan on the verge of "Highly Transparent" 33 China 2.67 Singapore, HK, Japan on the verge of "Highly Transparent" 34 Thailand 2.69 35 India 2.71 Thailand and India - most improved 42 Indonesia 2.87 48 Philippines 3.11 60 Macau 3.49 61 Vietnam 3.52 66 Sri Lanka 3.7 73 Myanmar 3.96 Source: JLL 29
SEA FUTURE DEVELOPMENT Market Transparency 30
SEA FUTURE DEVELOPMENT Institutionalisation and Rationalisation of Markets Collective investment schemes REITs, Unlisted Funds Benefits of institutionalisation: Liquidity Diversification Inflation Hedge Growing Investor Base Improved Asset Management Job Creation Best Practices Increased Transparency Innovation Capital Recycling 31
SEA FUTURE DEVELOPMENT Industry Professional Standards Standards are the foundations on which strong markets are built. Standards provide: confidence across the industry an assurance of professionalism a common language that crosses national borders global economic security Standards are fundamental to operating in a truly sustainable global environment, and offer: a common language increased transparency greater confidence through reduced risk cconsistent and accurate reporting ability to benchmark and forecast accurately ability to measure and analyse cost performance 32
SEA FUTURE DEVELOPMENT Industry Professional Standards 33
VALUATION TECHNOLOGY - TOPS
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THANK YOU James Crawford Executive Director, Valuation & Advisory Services, Singapore International Valuation, Asia 28 SEPTEMBER 2018