What does 2024 hold for real estate in 2024? We asked Savills real estate experts around the region.

In the second of a two-part series, experts from Savills in China, India, Vietnam, Indonesia, Pakistan and Malaysia tell Prospects what to look out for in their markets next year.

China

While China real estate has been making the headlines for negative reasons, there are some positives for 2024, says James Macdonald, Head of Research at Savills China (top, left). Even the slide in capital values demonstrates that the market is responsive and opportunities will open up. Meanwhile, increased US-China dialogue suggests a possible stabilization of the political environment, potentially fostering greater investor confidence in the Chinese real estate market.

The Chinese government is also implementing pro-growth policy initiatives across various sectors reflecting a commitment to economic development and creating a more hopeful backdrop for real estate market activities.

Interest from investors and developers in the multifamily market is on the rise due to improvements in economies of scale, a sluggish residential sales market, changing tenant attitudes, and government support.

The shift from purchaser goods to purchaser services in the retail market aligns with changing consumer preferences, presenting opportunities for growth, especially in the leisure and entertainment sector, where domestic operators have shown strong growth. This should benefit malls in China’s leading cities. A recent policy document highlighting support for the tourism and hospitality sector aligns with potential growth opportunities in these areas.

India

Investors are likely to gravitate towards alternative asset classes in India next year, buoyed by expectations of stability after the general election in April and favourable interest rates, says Arvind Nandan, Managing Director, Research & Consultancy at Savills India (top, middle). A strong emphasis on manufacturing, along with digitalization, is preparing the ground for robust global equity inflow into data centres, warehousing & logistics, life sciences, and shared spaces such as co-living and flexible office space.

As global office demand improves, we expect strong demand for Indian offices, however with a strong by both tenants & developers on sustainability and ESG compliance in the coming year. ESG compliant buildings are likely to be preferred by occupiers for their office relocation and expansion needs.

Hybrid working has accelerated in India and is driving demand for office and residential space in Tier 2 and 3 cities, where workers and occupiers can find cheaper space. This pattern is likely to continue in the next year with large companies viewing cities such as Kochi, Coimbatore, Vizag, Nagpur, Jaipur and Indore favourably for their hybrid operations.

India is mulling the introduction of small and medium-sized real estate investment trusts, which will make the market more accessible for retail investors. Micro REITs, which are expected to be launched in 2024, will offer the flexibility to invest in residential real estate, unlike traditional REITs.

After record sales volume in 2023, India’s residential market is set for another bumper year, however there are concerns about the affordable residential sector, due to rising input costs, post-COVID caution, as well as the end of a subsidy scheme for low-income borrowers. Mortgage defaults in the low-cost housing sector have been rising, so the affordable housing segment is likely to be slow at best.

Vietnam

After a somewhat weaker economy in 2023, GDP growth is predicted by Fitch Ratings to rise to 6.3% in 2024, says Troy Griffiths, Deputy Managing Director at Savills Vietnam (top, right). Manufacturing, trade, and services will continue to drive Vietnam’s economic growth while we expect more transactional activity in the real estate market. Ongoing infrastructure improvements in Ho Chi Minh City will support further growth in the long term.

International groups from Japan, Singapore and elsewhere have been investing in industrial and logistics parks in a number of Vietnamese provinces. The drive to diversify manufacturing and supply chains continues and Vietnam will be a key beneficiary.

Rising GDP is good news for Vietnamese consumers and we see great potential in the retail market; meanwhile the nation continues to grow in popularity as a travel destination for holidaymakers from Asia Pacific and further afield.

While the residential market was sluggish in 2023, there is still a lack of affordable housing and we see this as another area with potential for investors who can find a successful formula.

Malaysia

After a steady post-pandemic recovery in 2022 and 2023, Malaysia is on track for a stronger 2024, although external geopolitical factors will still exert pressure, says Datuk Paul Khong, Managing Director and Head of Savills Malaysia (bottom, left).

Industrial, logistics and data centres will continue to be top favourites in 2024 and residential will fare well in both affordable and landed products. Most retailers are performing well, especially F&B and luxury brands, even though post-Covid revenge spending is diminishing and inflationary pressures are leading to prudence from consumers.

ESG is becoming a more important topic and such factors will play an even bigger role as multinationals and banks are now starting to relocate to green-certified buildings while developers are also seeking green certification for their projects, supported by banks with green financing packages.

Finally, we predict more developments will move southwards to Johor, with Malaysia and Singapore signing up to a Joint Special Economic Zone early in 2024.

Indonesia

Indonesia is projected to see a stable economy in 2024, which will lead to continued positive sentiment in the property market, says Tommy Henria Bastamy, Senior Director, Research & Consultancy at Savills Indonesia (bottom, middle).

However, the presidential election and major political events in 2024 are expected to affect market performance of certain property sectors as some investors and occupiers adopt a wait and see approach and delay transactions or investment until after the February elections.

We expect the performance of the hotel, retail, logistics and landed residential sectors to continue to be strong in 2024. However, the office and apartment sectors are likely to remain under pressure in the year ahead.

Pakistan

Pakistan’s economic fundamentals are improving and 2024 should see rising GDP as well as falling inflation and unemployment, says Nadine Malik, Director of Strategy, at Savills Pakistan (bottom, right). The nation is on track to meet IMF conditions which should lead to a total of $3 billion in loans, which is critical funding needed to further stabilize the economy.

Centrally located, high-end residential areas in major cities will continue to see price increases due to scarcity of land and wealth gravitating to these areas from across the country. Rising construction costs will drive apartment prices upwards, as will continued demand for prime buildings.

Lack of Grade A office space means local and multinational tenants will compete for the best buildings, while flexible working will impact overall demand. Both these trends will drive the upgrade of current offices to provide better working spaces.

Further reading:
Asia Pacific Investment Quarterly