Southeast Asia 2019 Outlook - Southeast Asia to benefit from domestic consumption and shifts in global supply chains - JLL Vietnam
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Southeast Asia 2019 Outlook Southeast Asia to benefit from domestic consumption and shifts in global supply chains
Key investment themes in Southeast Asia for 2019
1. Mild downgrade in growth expectations 3. Technology companies continue to expand rapidly 5. Tourist arrivals and hotel room rates continue to grow
The IMF downgraded global growth expectations for 2019 in Southeast Asia In 2018, tourist arrivals across Southeast Asian cities grew
to 3.5% from 3.7% previously, as advanced economies are We estimate that technology companies leased about 15- 9% yoy, with international tourists visiting Vietnam and
expected to expand slower and trade challenges escalate. 20% of total gross office space in 2018 in Southeast Asia, Indonesia rising 20% yoy and 16% yoy respectively. Upscale
Southeast Asia is expected to grow by 4.8% in 2019-2023, compared to 5-10% just three years ago. We continue to hotel revenue per available room also grew by 5% yoy in
down from 5.0% previously, as the outlook for Indonesia expect these firms to potentially take up 15-25% of annual 3Q2018, after rising 6% in 2017. More hotel investment sales
and Philippines are scaled back. Higher oil prices will weigh office leasing volume for the next decade. In 2H2018, office were observed in Singapore, with capital values significantly
on fuel importers but benefit Malaysia, a net exporter. take-up surprised on the upside in Singapore and Bangkok, above expectations.
growing by 6% yoy, while demand moderated in Manila
2. Rising trade barriers dampen exports in near term and Jakarta after rapid growth in the prior few quarters. 6. Changes to our view
but benefit mid-tech countries in medium term Downsizing in Kuala Lumpur led to a shrinkage in occupied We upgraded our prime office rents forecasts for Singapore
Higher trade tariffs on China exports could impact imports office space in the city. after accounting for the higher-than-expected take-up in
of components by China from Southeast Asia in the short 2H2018. We now expect rents to rise 15% over 2019-2020.
term. However, in the medium term, manufacturers are 4. Global retailers expand in Southeast Asia, Office rents are expected to decline in Kuala Lumpur in
likely to expedite the relocation of operations to Southeast integrate online and physical points of sale 2019-2021E. Our Jakarta office rents forecasts for 2019-
Asia. This process has already started in the last five years Domestic consumption continues to grow in Southeast 2021E are now 6% lower than our previous estimates as
as wages in China rose. For Vietnam, its exports to the Asia due to urbanisation and higher incomes. Global the city’s vacancy rate remained above 30% by 4Q2018. We
United States accelerated in 2H 2018, and the number of FDI retailers such as Uniqlo, IKEA and Apple continue to expect rents in Jakarta to compress further but stabilise
projects from China, Korea, Singapore and Japan grew 17- expand their footprints. E-commerce companies such as beyond that. We have also mildly downgraded our Jakarta
37% yoy in 3Q2018. We also expect countries with mid-tech JD.com and Alibaba are collaborating with local groups to retail rents for 2019-2021E as rents grew just 1.8% yo in
skills such as Thailand and Malaysia to benefit. We expect integrate online and physical points of sale to tap on young 2018, down from 4% yoy in 2016-2017.
higher demand for industrial property in Southeast Asia. consumers who are both tech-savvy and continue to prefer
shopping as a leisure activity. The World Bank has raised
the rankings for the logistics sectors in Vietnam, Indonesia,
Philippines and Thailand significantly in the last two years.
2 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 3
Expectations for Thailand and Malaysia continue to improve
Fig 1: 2019 GDP growth forecasts Fig 2: GDP forecasts for 2019-2020 Fig 3: Indonesian Rupiah vs US dollar Fig 4: Current account surplus as % of GDP
8.00% 8.00% 14,800 54
7.00% 7.00% 14,600 53
14,400
6.00% 6.00% 52
14,200
5.00% 5.00% 51
14,000
4.00% 4.00% 50
13,800
3.00% 3.00% 49
13,600
2.00% 2.00% 48
13,400
1.00% 1.00% 13,200 47
0.00% 0.00% 13,000 46
Indonesia Thailand Malaysia Philippines Vietnam Singapore Indonesia Thailand Malaysia Philippines Vietnam Singapore
Q4
20 Q1
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2Q18 4Q18 2018 2019E 2020E
Source: Oxford Economics Source: Oxford Economics
Southeast Asia expected to grow 4.8% annually in 2019-2023 Limited downside to currencies after sharp corrections in 2018 Fig 5: Current account surplus as % of GDP
The IMF downgraded global growth expectations for 2019 In 2018, Indonesia raised its policy rates six times and by 200bps 25
to 3.5% from 3.7% previously as advanced economies are as it sought to stabilise the rupiah, which depreciated c.10%
expected to expand slower and trade challenges escalate. against the US dollar in the first three quarters of 2018. Similarly,
20
Southeast Asia is expected to grow by 4.8% in 2019-2023, Philippines tightened monetary policies to protect the Peso as
Current account surplus/deficit % of GDP
down from 5.0% previously, as the outlook for Indonesia and markets were concerned about its current account deficits.
Philippines continued to be scaled back. 15
In 4Q18, both the Indonesian Rupiah and Philippines Peso
Both Indonesia and Philippines are expected to continue to stabilised as expectations on the pace and magnitude of rising
face dampened exports as red tape, bureaucracy and poor global interest rates moderated. Most economists now expect 10
infrastructure continue to hamper progress. However, strong the US Federal Reserve to raise interest rates just twice in
domestic consumption is expected to keep growth above 5%. 2019, compared to thrice previously. While the ECB intends to
5
In particular, Indonesia’s strong domestic demand makes it end quantitative easing in 2019, it is unlikely to raise interest
highly resilient and the only economy in the region which is not rates immediately. We expect these trends to be supportive of
expected to grow any slower in 2019-2020 compared to 2018. investor sentiment in Southeast Asia in 2019. 0
2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
On the other hand, expectations for Malaysia and Thailand
continue to improve as these governments take steps towards -5
attracting more foreign direct investments. As a net exporter
Indonesia Thailand Malaysia Philippines Vietnam Singapore
of oil/gas, Malaysia is also likely to benefit from higher global
oil prices. Source: IMA Asia
4 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 5
Southeast Asian economies with higher skills to benefit from
US-China trade tensions
In the last decade, China has become a key partner of In the medium term, we think manufacturers are likely to Fig 7: Exports from Vietnam to the US
Southeast Asia, with the establishment of the ASEAN-China expedite the relocation of operations to Southeast Asia, which 16 70%
Free Trade Area (ACFTA) in 2010. The framework lowered the has already started as wages in China rose. The American 14 60%
Exports to US US$bn
average tariff rates on both imports and exports of ASEAN Chamber of Commerce in Shanghai undertook a survey in 12 50%
goods to China to 0.1-0.6%. The ACFTA is the third largest by September 2018 to gauge the impact of new US tariffs on 10
40%
trade volume after the European Economic Area and the North American companies in China. Of the 430 companies who 8
30%
6
American Free Trade Area. responded, 61% are in manufacturing-related industries. 20%
4
Around 70% of the companies expect a negative impact 10%
2
Today, China is Southeast Asia’s largest trading partner, making on their profits, production costs and reduced demand for 0 0%
up 14% of ASEAN’s exports in 2017. 48% of Southeast Asia’s products. Most respondents are adjusting their supply chains
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exports to China are in electronics, machinery and mineral in response to the tariffs, seeking to source components and
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fuels. Trade tensions between the US and China may impact assembly outside of China and delaying investment decisions.
Ma
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wo
Southeast Asia’s exports in the short term. As intermediate While 64.6% of respondents are not considering relocating their
st
2017 2018 yoy change
goods make up over 50% of China’s imports from Southeast manufacturing facilities out of China, 18.5% of respondents are
Asia, a decline in China’s exports is likely to reduce China’s considering relocating these to Southeast Asia. Source: Vietnam Customs
demand for such exports from Southeast Asia in the short term.
Fig 8: Global Manufacturing Competitiveness Index
Fig 6: Preferred destinations for relocation of China-based manufacturing facilities 120 7
6
100 5
80 4
Southeast Asia
3
60 2
1
40 0
Elsewhere
20 -1
-2
0 -3
Indian subcontinent
US
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United States 2016 2020 Change in rank (RHS)
Source: Global CEO Survey by Deloitte, 2016
Europe
Amongst the countries in Southeast Asia, Vietnam has already Outside of Vietnam, we also see Malaysia and Thailand as
seen an acceleration of exports to the US as well as the number potential net beneficiaries in the medium term. According to
East Asia of FDI projects in 2H2018, potentially due to the trade tensions Deloitte’s Global Manufacturing Competitiveness Index, CEO
between the US and China. Vietnam’s exports to the US grew respondents were asked to rank nations in terms of current and
17% yoy in 2018, including substantial growth in machineries/ future manufacturing competitiveness. The 2016 study found that
Latin America equipment, steel and steel products and wood and wood Vietnam, Malaysia, Indonesia and India are expected to become
products, where new tariffs by the US have been imposed. The more competitive over the next few years while countries such
number of FDI projects registered in Vietnam also started to as China and South Korea could become less competitive.
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% pick up in 3Q2018, with China FDI projects growing 37% yoy,
Korean FDI projects growing 21% yoy and Singapore and Japan
Source: American Chamber of Commerce, Shanghai, Sep 2018
growing 17% yoy.
6 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 7
Office take-up tapered off in 2H2018, mainly due to slowdown in
Kuala Lumpur, Manila and Jakarta
For manufacturing companies seeking to relocate their IMA Asia expects China’s exports to grow 3-4% p.a. over the In 2H2018, office take-up in the region grew by 3% yoy, sharply In Jakarta and Manila, office take-up has been strong, matching
operations from China to Southeast Asia, more developed next few years, decelerating from 15% p.a. in 2010-2014. In slower than the 5% yoy growth in the prior four quarters. This the high supply of new completions and expanding by 16%
countries with the requisite mid-tech skills such as Thailand comparison, Thailand and Malaysia’s exports are expected to was mainly due to negative net absorption in Kuala Lumpur as yoy in 1H2018, but this moderated to 13% yoy in 2H2018. We
and Malaysia could be more likely to benefit, in our view. Wages grow faster at 5% p.a. in 2019-2023. well as slower growth in Manila and Jakarta. In Kuala Lumpur, continue to expect office take-up in Jakarta to grow at 11%
in these countries are now about 60% lower than in China, downsizing by some financial institutions and government CAGR in 2019-2023E and take-up in Manila and Bangkok to
compared to 33% in 2010. linked companies reduced occupied office space in the city grow at 4-5% CAGR in the same period.
centre by over 500,000 sqft in 2H2018.
Fig 9: Manufacturing wages in Southeast Asia compared to China Chart 11: Office net absorption in Southeast Asia (yoy)
0.90 10.0%
0.80 9.0%
Manufacturing wage as % of China wage
0.70 8.0%
0.60 5.0%
0.50 6.0%
0.40 5.0%
0.30 4.0%
0.20 3.0%
0.10
2.0%
0.0
1.0%
Malaysia Thailand Vietnam Indonesia
0.0%
2010 2018 2023 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018
Source: IMA Asia Source: JLL Research
Fig 10: Exports growth in Malaysia, Thailand to grow faster than China Chart 12: Office net take-up in Southeast Asia (yoy)
40 18%
16%
30
14%
12%
20
10%
10 8%
6%
0
4%
2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E
-10 2%
0%
-20 1H2016 2H2016 1H2017 2H2017 1H2018 2H2018
-2%
Malaysia Thailand China Jakarta Manila Bangkok Singapore Kuala Lumpur
Source: IMA Asia Source: JLL Research
8 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 9
Technology companies now a key office occupier group in
Southeast Asia
Fig 13: Estimated gross office space leased by technology companies
4% 9% 16%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Five years ago Three years ago Last 12 months
Kuala Lumpur Manila Singapore Jakarta Bangkok HCMC
Source: JLL estimates
Technology companies have been expanding swiftly in In the last two years, investments into e-commerce companies
Southeast Asia and have become a key office occupier group in Southeast Asia accelerated. For instance, Singapore-based
in the region in the last five years. We estimate that these Sea, which operates Garena gaming and e-sports platform
companies leased around 15-20% of total gross office leasing and Shopee e-commerce site, just raised over USD 1 billion
volumes in Southeast Asia, compared to 5-10% just three years in 2017 through an initial public offering and a further USD
ago. We expect technology companies to continue to expand in 575m in June 2018. Tencent, China’s largest video games and
Southeast Asia, potentially taking up 15-25% of annual gross social media operator has been investing in Garena for several
office leasing volume for the next decade. years. In early 2018, Alibaba increased its investment in Lazada
by USD 2billion, bringing its total investment to date to USD
Technology hardware manufacturers such as Dell, Intel, 4billion. This was in addition to its USD 1billion investment
Apple, Ericsson and Siemens have been operating in the region in Tokopedia, which operates in Indonesia. As gaming and
for decades and new players are investing in the region. In e-sports markets grow in Southeast Asia, we think gaming
Bangkok, Huawei opened its Southeast Asia Research and companies such as Garena, Ubisoft, Quest Drop and Blizzard
Development centre in 2017 and is now the largest technology will start to expand quickly. The number of PC and mobile
occupier in Bangkok, taking up more than 15,000 sqm of space, gamers in Southeast Asia is projected to reach 400 million by
up from just 1,000 sqm in 2013. 2021, according to Niko Partners.
In the last ten years, internet companies such as Google, Both international and local coworking companies are also
Amazon and Facebook started to operate in Southeast Asia. rapidly increasing their presence in Southeast Asia, at pace
For instance, Google started its Singapore office with just 24 with the global trend. WeWork acquired Spacemob as part
people in 2007 but this Asia Pacific headquarters had grown to of its entry into Southeast Asia in August 2017 and has been
over 1,000 employees by 2017. As of 2018, Google is the largest expanding at breakneck pace since then. Justco started in
corporate occupier in Singapore, taking more space than any Singapore in 2015 and expanded into Bangkok and Jakarta.
financial institution.
10 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 11Where are the largest technology companies in Southeast Asia?
Fig 14: Where are the largest technology companies in Southeast Asia? Chart 15: Flex space penetration in Southeast Asia
100% 4.5%
90%
4.0%
80%
3.5%
70%
3.0%
60%
2.5%
50%
40% 2.0%
30%
1.5%
20%
1.0%
10%
0.5%
0%
Facebook Google Alibaba Sea Wework
0.0%
Singapore Kuala Lumpur Bangkok Jakarta HCMC Manila Singapore Bangkok HCMC Manila Jakarta Kuala Lumpur
Source: JLL estimates Source: JLL Research
We find that the largest global technology companies in E-commerce companies such as Sea (which operates
In Southeast Asia, flexible work spaces have grown by c.40%
Southeast Asia currently take up between 20,000 sqm and Garena, Shopee and Airplay) and the Alibaba group (which CAGR in the last three years and now take up 2% of the office
50,000 sqm in total, spread amongst three to five cities: operates Lazada, Alipay and UC Web) are operating out of stock, from 0.5-1.0% in 2015. Singapore enjoys the highest
All of them have some presence in Singapore, Bangkok and more locations in Southeast Asia and take up substantially penetration rate, with flexible work spaces taking up 4.2%
Jakarta. more office space in Jakarta than Singapore, followed by of JLL island-wide office stock. The growth of flexible work
Bangkok. We believe these companies are set up to serve spaces in Southeast Asia is in line with the rapid growth in
In many cases, the companies have grown their headcount
the large and growing domestic markets of Indonesia, Asia Pacific, where flexible space stock recorded a compound
by 30-50% CAGR over the last 5-10 years.
Thailand and Vietnam where personal consumption annual growth rate of 35.7% in 2014-2017, much higher than
Internet companies Google and Facebook have most of expenditure is growing by over 6% annually. in the United States (25.7%) and Europe (21.6%) over the
their office footprint in Singapore, which acts as a regional same period. JLL predicts that as much as 30% of corporate
headquarters and a base for marketing, sales, and research Flexible office space operator WeWork has expanded rapidly portfolios could be flexible space by 2030. What initially began
and development operations. in the last two years and now take up over 50,000 sqm across as a platform for freelancers and startups, flexible space
the region. providers are now tailoring their offering to accommodate
corporate users.
12 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 13Global retailers to continue to expand in Southeast Asia
Domestic consumption continues to grow in Southeast Asia from a vending machine. Modern grocers can provide in- be the largest IKEA in the world. Apple has opened its second tertiary students in Thailand. Alibaba currently has a presence
due to urbanisation, rising employment in the manufacturing store chefs that cook a shopper’s groceries on demand, with retail store in Southeast Asia in Bangkok, and is considering in all six countries in Southeast Asia and targets to open high-
and services sectors and growth in the middle-income deliveries made in under two hours from initial order. Jakarta and Vietnam next. It is also planning additional stores tech stores in the near term. The company is collaborating
household population. While online retail makes up 30% of in Bangkok and Singapore. with Malaysia and Thai governments on logistics hubs and
retail sales in China, it is currently just 5% in Southeast Asia One example of a retailer that is expanding in Southeast Asia is e-commerce parks.
where shopping is still seen as a leisure activity, as customers Uniqlo, which said it would double its Southeast Asia network E-commerce companies from China, such as Alibaba and
have a strong preference to touch and feel the product. Due over the next four years to 400 stores by 2022 and treble sales JD.com, continue to expand in Southeast Asia. Potentially, We expect the transformation of the retail business to spill
to the young and tech-savvy population in Southeast Asia, to USD2.7 bn from USD 0.9 bn in 2017. Uniqlo has opened there are several similarities between China and Southeast Asia over into higher demand for industrial and logistics space in
global retailers see the region as an ideal place to expand and its first store in Thailand and is targeting suburban stores in in terms of consumption growth rates and technology adoption Southeast Asia. In Philippines, Lazada doubled its plant in
integrate online and physical retail points of sale. Thailand, Malaysia and Philippines. It will also start to open by youths. JD Central, a joint venture between JD.com and Cabuyao, Laguna to 60,000 sqm in 2018. Zalora plans to move
stores in Vietnam, Laos and Myanmar. IKEA, the Swedish Thailand’s largest retail firm Central Group, aims to provide to a four-storey warehouse facility in Cavite in 2019 that can
For example, some outfit retailers in malls have created ‘virtual furniture maker, is currently operating in Singapore, Malaysia, e-commerce and fintech services and accelerate omni-channel accommodate 5 million product inventory, or five times more
shelves’ that allow customers to order the items they want for Indonesia and Thailand. It targets to double its business and retail growth in Thailand. The two firms will also collaborate to than the 1 million product inventory capacity of its existing
delivery, if the store does not have the items in stock. Other enter new markets in Southeast Asia in the next few years. The provide IT solution services for supply chain development for warehouse. JD Central targets to increase the number of
retailers use ‘magic mirrors’ that allow users to try new makeup new IKEA store in Manila (in partnership with SM Group) will small businesses and developing e-commerce skills among warehouses in Thailand to five in early 2019.
looks with the help of Augmented Reality, and then buy items
14 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 15Logistics performance in Southeast Asia continues to improve Strong tourist arrivals to boost hotel investments in the coming
24 months
Fig 16: Logistics Performance Index (global ranking) In 2018, tourist arrivals surged across Southeast Asia, growing Upscale hotel revenue per available room (RevPar) also grew
71 9% yoy. The number of international tourists visiting Vietnam by 5% yoy in 3Q18, after rising 6% yoy in 2017. Over the last
Philippines 60
and Indonesia rose 20% yoy and 16% yoy respectively, while four quarters, hotel RevPar rose 5-6% yoy in Kuala Lumpur and
Indonesia 46 63
Thailand attracted 12% yoy more tourists. Investor interest in Bangkok. Singapore’s hotel RevPar finally recovered in the last
Malaysia 32 41 hotels is rising and we expect more hotel assets to be sold in the four quarters after declining for five years.
Vietnam 39 64 coming months in the more developed Southeast Asia markets.
Thailand 32 45
Taiwan 25 27
Fig 18: Tourist arrivals grew 9% yoy in Southeast Asia 2018
China 2627
35.00%
Korea 2425
Hong Kong 9 12 30.00%
Singapore 5 7
25.00%
Japan 5 12
20.00%
0 10 20 30 40 50 60 70 80
2016 2018 15.00%
Source: World Bank 10.00%
5.00%
Fig 17: Logistics Performance Index – Competence and quality of logistics services (global ranking)
0.00%
Philippines 69 77 2016 2017 2018E
-5.00%
Indonesia 44 55
Malaysia 3536 Vietnam Indonesia Philippines Thailand Singapore Malaysia
Vietnam 33 62 Source: JLL estimates and various country tourism boards
Thailand 32 49
Taiwan 13 30 Fig 19: Change in hotel revenue per available room yoy
China 27 27
30%
Korea 25 28
Hong Kong 11 12
20%
Singapore 3 5
Japan 4 12
10%
0 10 20 30 40 50 60 70 80 90
2016 2018 0%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18
Source: World Bank
-10%
Southeast Asian countries continue to improve the The index measures six components including (1) efficiency of
-20%
performance of their logistics sectors. According to World customs and border clearance; (2) quality of trade and transport
Bank’s Logistics Performance Index (LPI), Vietnam’s logistics infrastructure; (3) ease of arranging competitively priced
-30%
performance is now ranked 32nd globally compared to 64th in shipments; (4) competence and quality of logistics services;
Jakarta Bangkok Kuala Lumpur Singapore Manila
2016 and now is just slightly behind Thailand. Indonesia also (5) ability to track consignments and (6) frequency where
moved up to 46th from 63rd rank. Singapore, Japan and Hong shipments are delivered on schedule. Vietnam and Indonesia Source: JLL estimates
Kong are still the most efficient logistics hubs. improved the most on their logistics quality and competency.
16 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 17Key changes to our views for 2019 Authors
Chart 20: Office rental compound annual growth rate (%) Regina Lim Veena Loh
6%
Head of Capital Markets Research Head of Research
4% Southeast Asia Malaysia
Regina.lim@ap.jll.com Veena.loh@ap.jll.com
2%
0%
-2% Singapore Jakarta Manila HCMC Bangkok Kuala Lumpur
-4% Andrew Gulbrandson Tay Huey Ying
-6% Head of Research Head of Research
Thailand Singapore
-8%
Andrew.gulbrandson@ap.jll.com Hueyying.tay@ap.jll.com
-10%
2016-2018 2019-2021E
Source: JLL Research
Janlo de los Reyes James Taylor
Chart 21: Prime retail rental growth yoy Head of Research Head of Research
Philippines Indonesia
12.0%
Janlo.Delosreyes@ap.jll.com James.taylor@ap.jll.com
10.0%
8.0%
6.0%
4.0%
Trang Le
2.0%
Head of Research
0.0% Vietnam
-2.0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 trang.le@ap.jll.com
-4.0%
-6.0%
-8.0%
-10.0%
Bangkok Jakarta Kuala Lumpur Singapore
Source: JLL Research
Singapore prime office rents rose 22% over 2017-2018 and we However, after 2019 supply volumes are expected to be more
now expect rents to continue to rise 15% over 2019-2020, slightly manageable and as vacancy rates come down from their current
higher than our previous forecast. The upgrade to our Singapore level we are likely to see some stability in rents.
office rents forecasts was made on the back of stronger than
expected office take-up in 2018 and the withdrawal of some In 2018, retail rents across Southeast Asia continued to increase
aging stock expected in 2019. Our Jakarta office rents forecasts slightly by 2.8% yoy on average. Bangkok rents rose the fastest,
for 2019-2021E are now 6% lower than our previous estimates as rising 3.4% yoy. Singapore retail rents finally grew yoy after three
vacancy rate in the city remained above 30% despite strong net years of decline. We have mildly downgraded our Jakarta retail
absorption in 2018. Despite improving office demand over the rents for 2019-2021E as rents only grew just 1.8% yoy in 2018,
past couple of years, we expect Jakarta office rents to compress down from 4.0% yoy in 2016-2017. We expect Jakarta retail rents
further in 2019, extending the downward trend since mid-2015. to grow 3% yoy in 2019.
18 Southeast Asia 2019 Outlook Southeast Asia 2019 Outlook 19jll.com JLL © Copyright 2019 JLL. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
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