Moody's Investors Service says that demand recovery will be uneven across Indonesian property segments, although cash flow is expected to broadly improve from low levels in 2020 - Photo: Special

JAKARTA (TheInsiderStories) – Property markets in major Southeast Asian and South Asian countries will benefit from China’s Belt and Road Initiative in the coming five years, with Indonesia and the Philippines likely becoming the biggest winners, according to Colliers International’s (NASDAQ: CIGI; TSX: CIGI) report.

The investment will be led by big infrastructure projects in countries and regions related to the initiative. “Such projects will stimulate growth in wealth, enhancing existing investment possibilities,” said Andrew Haskins, executive director of research, Colliers Asia.

According to Haskins, most Southeast Asian property markets have long-run attractions, with Indonesia and the Philippines standing out. Shortage of stock suggests development projects with local partners will be key to market access, and opportunities will centre on industrial and residential property.

The report from real estate consultancy Colliers International indicated that Chinese investment in property in Southeast Asia and South Asia reached US$2.5 billion in 2017, nearly four times the level of 2016 and the second highest after $4.1 billion in 2013.

In particular, Singapore was the clear focus of interest, accounting for $2.1 billion of investment, or 84 per cent of the total, followed by Malaysia and Indonesia, with $246 million and $169 million respectively, according to the report.

The report forecast that in the coming five years, the Belt and Road Initiative, coupled with the firm Chinese economy and renminbi strength, will drive Chinese investment in emerging Southeast and South Asian markets.

Earlier this year, Knight Frank, an independent global property consultancy, reported that over the past four years, Singapore (US$3.87 billion), Malaysia (US$2.37 billion) and South Korea (US$2.74 billion) were the top recipients of Chinese outbound real estate investment in countries and regions related to the initiative.

“The Belt and Road Initiative is one of the clearest manifestations of China’s vision and influence. The infrastructure and investment underpinning the Belt and Road Initiative will streamline trade flows and lift economic activity in much of Asia, the Middle East, and North and Eastern Africa,” said Kevin Coppel, regional head of Knight Frank Asia-Pacific.

China has become an increasingly important player in global property markets. According to Real Capital Analytics (RCA), outbound Chinese real estate investment reached an all-time high of $39.5 billion in 2017, which represents a sevenfold increase from 2012 and an 8 per cent rise year-on-year.

With robust economic growth and low real interest rates set to persist in Asia, investment property transaction volumes should remain high.

Terence Tang, Managing Director of Capital Markets and Investment Services at Colliers International, Asia mentioned 2017 ended with a flurry of activity across the region that showed few signs of abating as we entered the new year.

Sentiment in some emerging markets, however, including Indonesia and India, remains cautious as investors gauge policy and regulatory changes amid an uncertain political environment.

However, these changes and the ambitious development plans taking shape around the region will be a key driver of opportunity in 2018 and beyond.

In China, for example, two urban redevelopment site transactions in the Pearl River Delta in 4Q totalled $1.1 billion, while urban master plans to transform Beijing, Shanghai and Chengdu into the international gateway or global cities by 2035 will pave the way for attractive residential and commercial investment opportunities.

In terms of key Asian hubs, investment activity in Hong Kong gained further momentum in 4Q, with a new record set in the luxury residential market (an all-time Asia high for Mount Nicholson sold for over $16,700 per square feet).

Written by Elisa Valenta, email: