Industrial property demand fuels real estate growth in 2024
Post-pandemic recovery and evolving market needs will drive significant growth in industrial and specialized real estate sectors in Southeast Asia.
The real estate landscape in Southeast Asia is set for an upturn in 2024, driven by a surge in demand for industrial properties and specialized developments.
John Low, Roland Berger's Managing Partner in Southeast Asia, observed improvements in real estate as early as the latter half of 2023, setting the stage for stronger performance in 2024.
"This growth is primarily driven by increased demand for industrial properties and special-purpose developments, including senior living, student housing, and ESG-compliant estates," he explained. These sectors reflect the changing dynamics and emerging needs in the real estate market, influenced by broader economic and demographic trends.
Low also expressed optimism in the commercial real estate sector, which faced challenges in 2023.
"The downturn in the global real estate sector is mostly over. We expect property sales to improve, fueled by a postponed demand and a positive spillover from the industrial sector," he said. This anticipated improvement marks a significant shift from the previous year's challenges, signaling a recovery and new opportunities in the market.
Low revealed that the data centre industry in Southeast Asia will expand, driven by increasing demand for colocation services, digital transformation, and favorable government policies.
He also noted that this growth will vary across countries, with several new data centre announcements in Malaysia, Indonesia, and Singapore.
“But this growth, I will say, will differ from country to country. For example, in Malaysia, there are already seven announcements of new data centres. There's a couple in Indonesia, there's one in Singapore, so probably growth outside of these countries,” he said.
Low further emphasized the pivotal role of the industrial segment in the real estate sector's performance in the upcoming year. "Growing trade, the expansion of e-commerce, and the regional high-tech industry are boosting demand for high-quality industrial space," he said.
Additionally, he notes the strategic shift in supply chains from China to Southeast Asia, further fueling this demand.