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Interview with Victoria Silvano, Global Ambassador for the Philippines, Malaysia, and Singapore
Can you tell me a bit about what areas you're responsible for, and what makes them so exciting to work in?
I'm the Global Ambassador for the Philippines, Malaysia, and Singapore. I'm excited because all three countries are different yet have some similarities. The Philippines is composed of over 7,000 islands, and this is where I am originally from. Its culture is so diverse because of the different countries who took over the Philippines over several centuries. Singapore is a small but mighty country and is considered the financial capital of the world as most financial institutions have a branch or are headquartered in Singapore. It also has a diverse population with Chinese, Hindu, and Malay as the dominant cultures. Malaysia abuts Singapore such that there are cross-border trade flows and similar cultural characteristics. Travel between these two countries is constant, especially with skilled and professional labor needed in both countries.
How has inflation and the state of the global economy affected your regions?
In the Philippines, inflation is expected to average 6.2% in 2023 before easing to 4.0% in 2024. Local food supply constraints and rising global commodity prices led to high inflation rates in early 2023. Inflation is projected to decelerate in the second half of 2023 and through 2024 as the series of monetary policy tightening takes effect and global commodity prices ease.1
In Malaysia, growth hit a 22-year high of 8.7% last year as the country bounced back from a pandemic slump, but cooling global demand is expected to weigh on the outlook for this export-oriented country. This expansion was supported by improved labor market conditions, a continuation of large infrastructure projects, and a recovery in tourism.
Singapore, being closely tied to international financial markets, has not been spared from rising interest rates in an unfavorable economic environment. In 2022, it was reported that private residential property prices rose by 8.6%, a slight decrease from the 10.6% increase observed in 2021.
Do you have any risk reduction tips specifically for your regions?
Strong domestic demand in key markets, demographic trends, and the ongoing maturation of intraregional trade underpin positive economic growth patterns across the region—and may help cushion the Asia Pacific region from the risk of recession in Europe or the US. This means that there is more trade between the Asian countries, which helps sustain their economies against the negative economic impact of the outside world, such as natural disasters, the war in Ukraine, etc. Demographics certainly play a key role in increased demand for housing in the low- to middle-income group. With the Chinese government ending its zero-COVID policy in January, further en masse reinvestment in the South east Asia region is possible.
Can you tell us something about your regions that only an insider (aka: you!) would know?
In the Philippines, the real estate market has shifted to more coastal property transactions rather than vertical property sales. Land sales have risen during the pandemic and have continued to rise over the last couple of years. The expansion of new infrastructure across the country resulted in decentralization and more balanced developments in different parts of the country, not just in central business districts where conventional developments and new construction are located.
With the ongoing liquidity crisis in China's property sector, coupled with the persistent pandemic restrictions, Singapore has benefited from the redirection of capital that might otherwise have been placed in assets in China and Hong Kong. Chinese families and investors are looking to relocate assets, and themselves, overseas. These investors are typically ultrahigh- net-worth (UHNW) investors, family offices, and property investment funds, all of which have flocked into Singapore in the last two years. This is one of the reasons why Singapore is riding out the global property slump in the region.
Malaysia, on the other hand, has seen an oversupply of properties. After a decade-long house price boom, Malaysia's housing market has been cooling in the past two years due to massive overbuilding causing an oversupply of properties in both residential and commercial segments. Auction markets abound and professional investors take advantage of these auctions and massive foreclosures.
What real estate trends are happening in your regions, and what do you think the future holds?
2023 is projected to be a better year for the Asia Pacific (APAC) region. Despite the rapid change and uncertainty experienced worldwide last year, CBRE retains a relatively positive outlook for the Asia Pacific commercial real estate market in 2023.
Some current trends happening in the APAC region:
1. De-Urbanization and Population Growth: Many countries in the Asia Pacific region are experiencing rapid urbanization and population growth outside of the central business districts. This means an increased demand for residential properties, particularly in major cities.
2. Housing Affordability Challenges: The high demand for housing, combined with limited supply in some areas, has led to affordability challenges in certain markets. Prices have risen significantly, making it difficult for some segments of the population to access affordable housing. To combat this issue, policies are introduced to help developers build more homes with less restrictions on permits on new construction.
3. Shift towards Sustainable and Green Housing: Developers and buyers are increasingly focusing on energy-efficient and ecofriendly features in residential properties.
4. Technology Integration: Smart home features, such as home automation systems, energy management, and security systems, have become more prevalent.
5. Government Initiatives and Policies: Governments in various countries have implemented measures to address housing affordability and promote sustainable development. In the Philippines, the new administration aims to build one million homes per year to keep up with the backlog of six million units to date. Singapore has developed a unique housing system, with three-quarters of its housing stock built by the Housing & Development Board (HDB) and homeownership financed through Central Provident Fund (CPF) savings. As a result, the country's homeownership rate of 90% is one of the highest among market economies. In Malaysia, the government launched the Home Ownership Initiative last year, providing stamp duty exemption for first-time home-buyers.
Highlights and Emerging Trends for Asia Pacific Region2
It's an exciting and pivotal time for real estate in the Asia Pacific region. What's happening around the region?
- China's zero-COVID policy has ended.3 Economic forecasters are predicting substantial growth in this market.4
- High-net-worth individuals are predicted to keep purchasing homes in the international gateway cities in the region. Travel restrictions strengthen confidence.
- "In the inaugural SEA-5 Index, Malaysia has come out on top as the most attractive destination for data center investment."5 Other locations of great interest include Indonesia, Thailand, Vietnam, and the Philippines, which are all set to experience growth from this industry.
- Continued adaptation and variations of office spaces to accommodate hybrid working will continue.
- Emerging life sciences industry to increase demand for high-spec buildings. There's a greater demand for pharmaceutical manufacturers to be closer to consumers, and to house the entire Life Science process, from research and development to the end customers.
1 cbre.com.hk/insights/books/asia-pacific-real-estate-marketoutlook- 2023#:~:text=Asia%20Pacific%2 Forecast&text= Expected%20to%20peak%20in%202023%20and%20over%20 the%20course%20of%20the%20year.&text=Office%20 flight%2Dto%2Dquality%20and,to%20%2C%20led%20by% 20mainland%20China.&text=no%20higher%20than%20100 %20bps
2 thelancet.com/journals/lanwpc/article/PIIS2666-6065 (23)00020-2/fulltext
3 knightfrank.com/research/article/2023-01-03-2023- an-inflection-point-in-apac-real-estate-markets
4 content.knightfrank.com/research/2643/documents/en/ malaysia-data-centre-research-report-2023-10072.pdf
5 knightfrank.com/apac-outlook-report/2022-12-01-logisticssector- remains-tenacious-against-2023-headwindsabound
