Market Trends of ASEAN Condominiums and Apartments Industry
This section covers the major market trends shaping the ASEAN Condominiums & Apartments Market according to our research experts:
Increase in demand for multifamily housing driving the market
In November 2022, Singapore developers sold 259 new homes excluding executive condominiums (ECs), a 17.3% decrease from the 313 units sold in October 2022. This is the lowest monthly sales total since December 2014, and it is also lower than the 277 units sold in April 2020, when the Circuit Breaker period began. The absence of notable project launches in November contributed to the lackluster new home sales. According to Song, developers launched 319 housing units excluding ECs last month, the majority of which were "smallish" launches with lukewarm take-up. While November 2022's launched units tripled the 102 homes launched in October 2022, it is 75% lower y-o-y.
The outbreak of the Ukrainian war in February 2022 jolted the world, which was still reeling from the effects of the COVID-19 pandemic. The resulting turmoil in global markets has shaken investor confidence, but there is still some good news in the Southeast Asian region, particularly in the residential housing market. Despite global uncertainties, Thailand, Indonesia, and Malaysia are experiencing increased demand, with the latter two experiencing higher asking or listing prices. Malaysia, Singapore, Thailand, and Vietnam's residential markets remain resilient. In terms of attracting foreign investments, the Southeast Asian region remained a magnet for FDI, which directly supported job growth and allowed economies to recover faster from the pandemic-caused slowdown.
Affordability of properties in ASEAN countries attracting foreign buyers driving the market
The housing market in Kuala Lumpur has been particularly difficult, with prices falling 5.7% year on year. However, with infection rates beginning to fall and the government's recent effort to re-open more economic sectors following the acceleration of the vaccine drive, housing demand is expected to recover in 2022, and we may be able to see the light at the end of the tunnel for the city's residential market in the coming year. the introduction of REITs in the Philippines, which has gotten off to a roaring start with five new listings in less than two years - a much faster pace than seen in India. Long term, the introduction of REITs can benefit the country by raising fundamentals in its real estate sector to a whole new level.
Rich mainland Chinese have been the top foreign buyers of expensive private properties in Singapore in 2022, despite tax increases, as the city-state benefits from post-pandemic reopening and a relatively strong currency. Singapore has long been a magnet for the ultra-wealthy, drawn by the Southeast Asian city-state's stable politics, strong currency, and reputation as a haven for assets. Singapore's property prices have also tended to rise gradually, with fewer sharp rises and falls than in other popular markets. Stamp duties for foreigners without permanent residency were raised from 20% to 30% in 2022 to cool the private property market. Despite this, 143 luxury apartments were sold to foreigners from January to August 2022, up from 136 in the same period in 2019.
Southeast Asia has recently caught the attention of Gulf real estate investors. It's not surprising. Despite their booming economies, GCC (Gulf Cooperation Council) countries are dealing with over-liquidity and oversupply in the property market, both of which are hurting the sector and putting pressure on yields. Singapore was the first choice for ASEAN property investors. The property market in the city-state is still strong, but it has slowed due to a slowing economy, tighter lending regulations, and the region's highest real estate prices. As a result, investors turned elsewhere, identifying Malaysia and Thailand as new emerging real estate havens. Purchasing condos in Bangkok, particularly one-bedroom units near mass-transit stations, will be a long-term trend.
