Published on Thursday, 13 June 2013 00:00
Written by ALBERT CASTRO
Malaya Business News Online - Philippine Business News | Online News Philippines
Amidst concerns on the effect of the economic integration by 2015 of Southeast Asia, particularly on agriculture products, the country’s property market is seen to benefit from this single economy, according to property consultant Jones Lang LaSalle.
As the integrated economy result to better productivity, it will redound to more real estate developments in countries like the Philippines.
“With greater ease of capital flow and investments, the level of real estate investment activity is expected to rise in the untapped Southeast Asian markets as investor appetite grows. The level of capital flow in Asean is also likely to rise as and when regulatory barriers are removed,” according to Yang Liang Chua, Jones Lang LaSalle head of research for Southeast Asia.
Chua noted that the Asean economic community’s (AEC) goal of enhancing the mobility of skilled labor “will be the catalyst for the exchange of best practices across Asean. Urban design and development will benefit from these exchanges.”
“Greater innovation is expected as the mature cities move up the value chain, as rising pressure from limited and costly land and labor resources force these mature cities to increase their productivity in terms of construction processes and building efficiency,” Chua said.
“The construction industry will rely more on labor sourced within rather than outside Asean,” he added.
Chua also said that as the primary concern of companies and investors is to maximize profits and reduce costs, areas with lower production costs will draw lower end production away from costlier regions.
“The recent outflow of industrial production from China into the emerging markets of Myanmar, Vietnam and Cambodia and the outsourcing of backroom support functions from Singapore to the Philippines are some examples,” he said.
“The industrial assets in higher-cost regions such as Malaysia, Thailand and Singapore will undergo adaptive reuse if not redevelopment, focusing on providing higher value-added products and services while the new industrial estates in the Cambodia, Laos, Myanmar and Vietnam will support lower-end production. As more manufacturers relocate to Asean, the demand for industrial and logistic properties should consequentially increase,” Chua added.
Recently, University of Asia and the Pacific (UA&P) economist Bernardo Villegas said the Philippines is in the cusp of a manufacturing boom as an estimated $5 billion investment is expected to come in five years.
“China is no longer a cheap source of labor. Of course we compete with Vietnam and Indonesia, countries still abundant with cheap labor. But our advantage is we have tremendous labor peace. There are only two strikes in the Philippines as against hundreds in China and Vietnam. We already have paid our tuition fee in labor cost,” Villegas said.
Villegas also said that as the AEC 2015 deadline draws near, businesses will scramble to have a foothold in the expanded economy.
“You can be sure a lot of the companies in the advanced countries will compete for a place in the market and we are strategically located,” Villegas said.
Chua said that should such a single production base prove successful, “the elimination of tariffs on goods and services within Asean members will increase the region’s overall economic growth and wealth.”
“The next change could come from the shifting consumption pattern accompanying higher disposable income. There will be more manufacturing and services as investors take advantage of the tariff free region and consumption within Asean rises. We already see this happening, especially in Indonesia. The retail market is undergoing a transformation, as consumers armed with higher income are demanding more of a lifestyle-centric shopping experience,” he said.
The AEC will provide businesses with seamless access to a market of over 600 million people – 8 percent of the world’s population – living in a land area of 4.46 million sq km.