SOUTHEAST ASIA OUTLOOK 2025
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LONG-TERM GROWTH PROSPECTS REMAIN INTACT
Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact
Economic Indicators Snapshot (2024 1 )
The global landscape is currently marked by considerable policy uncertainty, triggered by the United States introduction of broad tariffs. As of time of writing, the situation remains highly fluid and the long-term implications of these measures remain uncertain. As such, this report may not capture the full extent of its impact, and its findings may be subject to change as new developments emerge. The risk of a global economic slowdown has risen, and this would invariably temper Southeast Asia’s (SEA) economic growth forecasts over the short term. The impact of unfolding events on SEA will be complex and varied, and the uncertainty could prompt the need for further diversification of supply chains within the region, though this process will take time. Despite these challenges, SEA has demonstrated economic resilience over the past decade and is still projected to be one of the world’s fastest-growing regions, underscoring its long-term growth potential. This outlook is underpinned by its youthful demographics, expanding middle class, and developing infrastructure, making it an attractive growth market for companies looking to establish or expand their presence in the region. Southeast Asia remains one of the fastest growing regions globally. SEA economy is poised to grow by 4.8% year-on-year (yoy) in 2024, faster than 2023 growth of 3.9% yoy. Southeast Asia’s economic resilience has been underscored by several major economies surpassing their initial economic growth forecasts. This outperformance can be attributed to a combination of internal and external factors. Domestic consumer spending, a key driver of gross domestic product (GDP) growth for emerging SEA, has remained steady, amidst low unemployment and steady wage growth. External demand has remained robust amidst a continued tourism recovery, higher exports, and robust foreign direct investment. ECONOMIC RESILIENC E
PHILIPPINES • Population: 120 Mn • GDP: US$426 Bn • Unemployment: 4.4% • Income Growth 2 : 7.6%
VIETNAM • Population: 101 Mn • GDP: US$409 Bn • Unemployment: 2.1% • Income Growth 3 : 8.6%
THAILAND • Population: 69 Mn • GDP: US$497 Bn • Unemployment: 1.1% • Income Growth 2 : 3.9%
MALAYSIA • Population: 34 Mn • GDP: US$407 Bn • Unemployment: 3.5% • Income Growth 2 : 4.6%
SINGAPORE • Population: 6 Mn • GDP: US$414 Bn
INDONESIA • Population: 283 Mn • GDP: US$1,323 Bn • Unemployment: 5.2% • Income Growth 2 : 5.1%
• Unemployment: 1.9% • Income Growth 2 : 2.8%
Source: Moody’s Analytics, International Monetary Fund, General Statistics Office of Vietnam, Cushman & Wakefield Research Note: 1 Data updated on 22 January 2025 2 Real Disposable Income per Capita Growth Rate (%) 3 Average Monthly Income Growth Rate (%)
Legend:
Reflects Population Size
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Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact
ASEAN’s Long-term Outlook
Vietnam’s economy continues to grow surpassing initial growth projections with an expected expansion of 7% yoy in 2024. The country attracted high levels of foreign direct investment (FDI) in 2024 as it solidifies its position as a regional electronics hub. Meanwhile, Malaysia and Singapore, integral components of the electronic supply chain, have benefited from recovering electronics demand and supply chain diversification in the region. The Philippines economy is supported by its expanding business process outsourcing (BPO) sector and recovering tourism industry. According to the Contact Center Association of the Philippines, contact center and BPO industries’ revenue are expected to reach US$32.16 billion in 2024, a 9% yoy increase. Thailand’s economy continues to recover, fueled by strengthening private consumption, increased manufacturing output, and a rebound in tourism, supporting a positive growth trajectory. Indonesia’s economy sustained stable growth, supported by its huge growing population and steady domestic consumption. However, cost of living pressures and rising taxes have raised concerns about the erosion of purchasing power of its middle-class population which would eventually impact overall private consumption. Following 2024’s outperformance, Southeast Asia’s economic growth is expected to moderate in 2025. That said, broad economic indicators remain encouraging with steady domestic consumption in the region, remaining supportive of growth. Over the longer term, the growth prospects for SEA remain positive. This growth will be underpinned by a growing middle class, urbanisation, higher infrastructure spending, growing exports, and relative resilience amidst a multipolar world order.
GDP: Projected to reach $4.5 trillion - the world’s fourth largest economy by 2030
Middle Class: Anticipated to grow from $172 million in 2010 to $472 million in 2030
Population: Projected to grow from 654 million in 2018 to 726 million in 2030 - third in the world
Growth Forecasts Across Major SEA Economies and Other Major Economies
Export: Could surge to $3.2 trillion by 2031, rising by nearly 90%
Digital Economy: To reach $1 trillion by 2030, almost four times the $263 billion achieved in 2024
Source: Moody’s Analytics, Cushman & Wakefield Research Note: Forecasts as of March 2025
Source: ASEAN Statistics, Boston Consulting Group, World Economic Forum, Cushman & Wakefield Research
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INBOUND INVESTMENTS INTO SOUTHEAST ASIA CONTINUE TO GROW
The longer-term prospects of Southeast Asia and her relevance in global supply chains, are reflected by her ability to continue to attract significant levels of foreign direct investment (FDI). Singapore continues to dominate FDI inflows, driven by sustained investments in high value manufacturing. Notably, Micron Technology, a leading US semiconductor manufacturer, has recently committed to investing US$7 billion in a state-of-the art packaging facility which produces semiconductor chips crucial to artificial intelligence (AI) applications. The launch of the Johor-Singapore Special Economic Zone (JS-SEZ) could potentially drive FDI flows into both Singapore and Malaysia. The JS-SEZ is envisaged to enable a wider business ecosystem where businesses can tap on Singapore’s connectivity and expertise as a global business hub, combined with lower costs and higher availability of land in Johor. Stronger integration and partnership in the region bode well for future opportunities and investment demand in the region.
Notably, Indonesia is poised to attract record levels of FDI investments in 2024. The downstream metal industry, transportation, and telecommunications sectors were the top recipients, aligning with Indonesia’s economic transformation and infrastructure development goals. Vietnam is emerging as global electronics manufacturing powerhouse, attracting significant investments in 2024 across key areas such as semiconductors, energy storage, renewable energy etc. Amkor Technology increased its total investment to US$1.6 billion in Bac Ninh (a northern province) for advanced semiconductor manufacturing while LG Display would inject another US$1 billion into its factory in the northern port city of Hai Phong, bringing the South Korean company’s total investment in Vietnam to over US$5.6 billion.
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Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact
FDI Inflows Across SEA
SEA’s share of global exports accounted for almost 8% of global exports in 2023, with total merchandise exports increasing by approximately 43% as compared to that in 2013. The growth of exports is expected to drive sustained demand for industrial real estate, including factories and logistics facilities, which are being developed across the region. Southeast Asia’s exports to grow
300
250
200
Southeast Asia Share of Global Exports
150
16%
100
US (BILLIONS)
50
12%
0
Pre-pandemic Average (2015 -2019)
2020
2021
2022
2023
Estimated 2024¹
8%
Singapore Indonesia Vietnam Philippines Malaysia Thailand
Source: ASEAN Stats, Countries’ Statistics Website, Trading Economics, Cushman & Wakefield Research Note: 1 Estimated for 2024 using annualization
4%
% of Global Merchandise Exports
Manufacturing in SEA captures a significant share of inward FDI inflows, at about 21.8% of total inward FDI inflows in 2023, according to ASEAN Secretariat report. Notably, greenfield FDI in manufacturing activities in the ASEAN region has surpassed China as the preferred destination for manufacturing investments from OECD 1 -headquartered companies, according to fDi Markets data. Between 2022 and 2023, companies pledged over US$55 billion to establish factories in ASEAN, more than doubling the US$21 billion announced in China during the same period. Note: 1 OECD is an international organisation with 38 member countries which includes major economies such as United States, United Kingdom, Japan, Australia, Korea etc.
0%
ASEAN
Singapore
Viet Nam Malaysia
Indonesia
Thailand
Philippines
2013 2023
Source: WTO, Cushman & Wakefield Research
Navigating uncertainty
Greenfield FDI into Manufacturing Activities by OECD-headquartered Companies
The United States’ recent introduction of broad tariffs has raised further concerns about the global trade environment and SEA, an export-oriented region would inevitably be impacted. Global geopolitical uncertainty could delay capital spending as companies take a wait-and-see approach. Nonetheless, with SEA’s cost advantages and rising intra-regional trade, the trend of supply chain diversification towards SEA is expected to persist, though we may see a higher degree of further diversification even within SEA. Extended supply chain ecosystems are likely to emerge as manufacturers diversify, mitigate risk, and optimize costs, leveraging growing intra-Asia trade flows. This trend could spur investments in other manufacturing hubs in the region as industrialists seek to de-risk their supply chain from geopolitical developments. though this will be contingent upon factors such as industry suitability, infrastructure support and availability of talent. Malaysia and Thailand could be markets to watch given their strategic geographical proximity and are established electronics manufacturing hubs. Indonesia has become a strategic market, emerging as a key beneficiary of nearshoring trends while also leveraging its vast population and rapidly expanding consumer market.
70
60
50
40
30
20
US (BILLIONS)
10
0
2011
2017
2021
2012
2013
2015
2018
2019
2016
2014
2010
2022
2023
2007
2020
2005
2008
2009
2006
2004
China
Asean
Source: fDi Market, Cushman & Wakefield Research
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INDUSTRIAL DEMAND FUELS SURGE IN REAL ESTATE INVESTMENT SALES
SEA Investment Sales 1,2 by Property Type
20
18
16
14
12
10
8
6
US (Billions)
4
2
-
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
O ffi ce Industrial
Retail
Hotel
Apartment Others
Despite a heightened interest rate environment, real estate investment sales 1 in SEA reached US$17.2 billion in 2024, a 16% yoy increase. Seen as a stable proxy for Southeast Asian growth, Singapore continues to draw investor interest, with a yoy increase of 11% in 2024. Investment sales volumes were led by the industrial sector, followed by office and retail assets. Notably, industrial investment sale volumes in Singapore and Southeast Asia surpassed office and retail investment sales for the first time in the last decade, highlighting the sector’s growing appeal. After Singapore, Malaysia saw a significant increase in investment sales volumes (around 51% yoy increase), with investment volumes bolstered by the sale of retail malls, data centres and logistics assets. Thailand too, saw almost three-fold yoy rise in investment sales, driven by hotel investment sales amidst a robust tourism recovery in the region.
Source: RCA, Cushman & Wakefield Research Note: 1 Data updated on 31 January 2025 2 Defined as real estate sales excluding development land from RCA
Top 3 Property Sectors by Country (2024)
Singapore 5.6B 2.8B
Malaysia
2.2B
1.4B
1.1B
0.4B
SEA Real Estate Investment Sales 1,2 by Country
Industrial
Office
Retail
Industrial
Retail
Hotel
20
Thailand
Indonesia 1 0.5B 0.01B
18
16
0.4B
0.2B
0.05B
0.01B
14
12
10
Hotel
Industrial
Office
Industrial
Hotel
Office
8
US (Billions)
6
Philippines 1 0.3B 0.05B
Vietnam 1 0.08B
4
2
-
2015
2016 2017
2018
2019 2020 2021
2022 2023 2024
Singapore Malaysia Thailand Indonesia Philippines Vietnam Others
Industrial
Retail
Industrial
Source: RCA, Cushman & Wakefield Research Note: 1 Data updated on 31 January 2025 2 Defined as real estate sales excluding development land from RCA
Source: RCA, Cushman & Wakefield Research Note: 1 Investment sales transactions figures may not be comprehensive, as some deals may not be publicly disclosed. Additionally, development land sales, which typically account for a substantial portion of transactions, have been excluded from these numbers.
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KEY THEMES Data centres boom
Operational Capacity Per Population, Selected Major Markets (people per MW < 100,000)
100,000
2024 was a year of significant growth and investment in data centers, particularly in Southeast Asia. The region saw huge investments in the sector, driven by the increasing demand for digital infrastructure and cloud services. Data Centre investments, led by Singapore, Malaysia and Indonesia, surged to US$3.2 billion in 2024 – a stark increase to more than four times of sales volume during the previous year, representing around 40% of total SEA industrial volumes in 2024. Driving investment sales demand were both investors and data center operators. On the investment front, Blackstone’s acquisition of AirTrunk, has demonstrated investors’ confidence in the long-term outlook of the sector. Data center operator activity was robust as well with colocation providers expanding their presence in several markets on the back of announcements by several hyperscalers to invest in cloud infrastructure in the region. Aside from Singapore, Johor, Bangkok and Jakarta are emerging as strategic hubs for hyperscalers in Southeast Asia, boasting a diverse ecosystem of major players and a robust pipeline of investments.
Despite the recent surge in data centre investments and development, the data centre market in emerging Southeast Asia remains underserved, presenting opportunities for further growth and investment. According to Cushman & Wakefield’s Asia Pacific Data Centre Construction Cost Guide 2025, an analysis of operational data centre power per capita shows a sharp difference across Asia Pacific and key data centre markets globally. Notwithstanding the strong demand for data centres, challenges such as power and water availability, which are key requirements for data centre development, continue to persist. Consequently, these constraints have shaped investment trends, with powered land commanding a price premium and driving interest for potential brownfield redevelopment sites that have already secured power.
80,000
60,000
40,000
People per MW
20,000
-
Japan South Korea New Zealand United Kingdom
Australia United States Hong Kong SAR
Singapore
Source: Cushman & Wakefield’s Asia Pacific Data Centre Construction Cost Guide 2025
Favourable long term prospects for factories and logistics assets
Aside from data centres, industrial investments in SEA have continued to grow given an anticipation of higher manufacturing and exports in the region. There is deep institutional liquidity for industrial assets as seen from the US$1.2 billion acquisition of seven industrial properties in Soilbuild Business Space REIT by a joint venture (JV) between private equity firm Warburg Pincus and Australia listed Lendlease Group. The portfolio totaled 4.5 million sqft of business parks and specialist facilities across life sciences, technology, advanced manufacturing, and logistics. E-commerce demand continues to expand, albeit it has moderated slightly due to a shift in consumer spending from goods to services. Nonetheless, the long term outlook for e-commerce remains optimistic, and this will drive continued demand for prime logistics. According to the World Economic Forum, SEA’s digital economy is projected to reach US$1 trillion by 2030, almost four times the US$263 billion achieved in 2024 in terms of GMV (the total value of goods sold between customers or from e-commerce platforms). Against this backdrop, an ample supply pipeline of new industrial stock has increased to cater to an anticipation of higher industrial demand. However, the fluid global trade environment has given rise to near-term mismatches in supply and demand, prompting some asset owners to incorporate flexibility into their new developments. In Vietnam, some industrial owners are adapting to slower warehouse demand by converting their properties into factory spaces. Over time, the growing supply of assets in Southeast Asia is likely to draw more institutional investment, as such investors generally seek opportunities that meet a certain scale threshold.
Operational Capacity Per Population, Selected Emerging Southeast Asia Markets (people per MW >100,000)
2,000,000
1,600,000
1,200,000
800,000
People per MW
400,000
-
Vietnam Philippines
Thailand
Indonesia
Malaysia
Source: Cushman & Wakefield’s Asia Pacific Data Centre Construction Cost Guide 2025
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Industrial Stock and Share of Pipeline Supply Across Cities (Q4 2024)
Wellness trends drive hotel interest
Hotel investment sales posted an increase of over 100% yoy in transaction volumes on the back of the continued international travel recovery and stronger demand drivers such as MICE (meetings, incentives, conferences and exhibitions), sports events, and concerts. Overall visitor arrivals are reaching close to pre-pandemic levels. Rising affluence in the region and growing trend toward experiential luxury have supported demand for luxury and up-scale hotels. Additionally, strong growth in demand for affordable wellness
experiences and medical tourism has helped to boost tourist arrivals in popular wellness destinations like Thailand, Bali, and increasingly, Vietnam. SEA countries have stepped up efforts to diversify their tourist source markets, as Chinese demand recovery has lagged, though the pace of recovery differs across markets. Singapore has seen Chinese tourists recover to 87% of pre-pandemic level while for Thailand, the recovery has lagged with tourist arrivals reaching about 60% of pre pandemic levels. India, driven
by its robust economic growth, has emerged as a huge potential market. Countries such as Thailand, Vietnam, Indonesia, and Malaysia are actively courting Indian tourists by exploring visa waivers, streamlining visa processes, and enhancing air connectivity with India. According to a Booking.com and McKinsey report, India is projected to be the fourth-largest global travel spender by 2030, driven by its young population with the median age of 27.6, significantly younger than that of most major economies.
10% 15% 20% 25% 30% 35%
100 120 140 160
0 20 40 60 80
0% 5%
% of pipeline Supply
Industrial Stock (million sf)
Singapore
Greater Jakarta (Warehouse / Logistics)
(Warehouse)
Islandwide (Prime Logistics)
Philippines –
Logistics)
Vietnam Northern Key Economic Region (Logistics)
Vietnam Southern Key Economic Region (Logistics)
Thailand (Warehouse /
Stock (Mil Sq Ft)
Planned/ Under Construction (Mil Sq Ft)
Percentage of Pipeline Supply
Source: Cushman & Wakefield Research
Visitor Arrivals Breakdown by Countries (2019 vs Estimated 2024)
Investors go shopping The retail sector has started to come on to the radar of institutional investors, especially in Singapore, amidst better-than-expected operating performance despite the overhang of e-commerce. The majority of retail spending is still done within physical stores, highlighting the importance of well-designed and convenient retail malls. Prime retail rents have continued to rise across most major markets, supported by resilient domestic consumption, tourism recovery and stabilising e-commerce adoption. The highest-value transaction in this segment during 2024 by absolute price was the sale of a 50% stake in ION Orchard mall in Singapore at an agreed property value of US$1.4 billion (50% basis) to CapitaLand Integrated Commercial Trust. Another key transaction was KLCCP Stapled Group’s acquisition of the remaining 40% equity interest in Suria KLCC Sdn Bhd (Suria KLCC), which owns and manages Suria KLCC Mall in Malaysia, for US$477 million.
45
100%
90%
40
80%
35
70%
30
60%
25
50%
20
SEA’s Main Streets’ Retail Landscape (2024)
40%
Millions
RENT (USD/ SQFT/YEAR)
RENT (USD/ SQFT/MONTH)
15
COUNTRY
CITY
LOCATION
YOY (LCY)
30%
Singapore
Singapore
Orchard Road
$468
$39.0
2%
10
20%
Vietnam
Ho Chi Minh City
Dong Khoi
$368
$30.7
-6%
Vietnam
Hanoi
Trang Tien
$312
$26.0
0%
5
10%
Malaysia
Kuala Lumpur
Suria KLCC
$277
$23.1
6%
Central Retail District (CRD)
Thailand
Bangkok
$126
$10.5
1%
0%
0
Thailand Malaysia Singapore Vietnam Indonesia Philippines
Indonesia
Jakarta
Prime
$93
$7.8
7%
2019 Estimated 2024 Percentage of Pre-pandemic Levels
Philippines
Manila
Prime Metro
$51
$4.3
3%
Source: ASEAN Stats, Country Tourism Website, Cushman & Wakefield Research 1 Estimated for 2024 using annualization
Source: Cushman & Wakefield Research
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Office supply pressure ease Investments into offices have slowed as investors’ concerns about the long-term impact of hybrid work continue to persist. SEA’s office investment sales market continued to
with a view to deleverage amidst a higher-for-longer interest rate environment and recycle capital. With the exception of Singapore, vacancy rates across most markets remain elevated though they are gradually easing. Landlords, especially for new office stock, have also continued to hold on to their asking rents as operating costs have gone up amidst
higher construction costs and inflation. This has led to office rents steadily edging up higher across most of Southeast Asia. Singapore and Jakarta will be key markets to watch, with a dearth of new office supply over the next few years. Jakarta’s office rents could potentially grow by 8.5% annually over 2025 to 2029 amidst a very tight supply situation.
face challenges with volumes dropping by more than 20% in 2024 as compared to that in 2023. That said, there were pockets of activity with a few big-ticket office deals in Singapore, as some asset owners divest non-core assets
SEA Office Rental Growth
-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
2024 2025F Average 2025F - 2029F
Source: Cushman & Wakefield Research
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BOX ARTICLE: LANDMARK JS-SEZ AGREEMENT
Industries which are labour and land intensive are expected to show interest and would encourage the adoption of the SG+ twinning model. For example, some parts of the value-chain i.e., assembly and testing could move to Johor, with high value manufacturing and global/regional distribution remaining in Singapore. Some industries that have tapped into the SG+ model include general manufacturing, food and agro processing, as well as logistics. Higher adoption of SG+ Twinning Model Property market impact Positive for long term property demand for both Singapore and Malaysia: The zone may draw the supply chains that are shifting elsewhere as a result of US-China trade tensions, leveraging Singapore’s global finance and logistics centre capabilities with Johor’s access to competitive land, labour and energy. This could drive new property demand in both Malaysia and Singapore. Malaysia’s property sector to get a boost: The SEZ provides a stronger value proposition for companies that are already considering lower cost alternatives. Over time, as industrial demand picks up, this would have positive spill-over effects on other sectors such as retail and residential. Rejuvenation opportunities for Singapore’s industrial market: As some companies relocate part of their value-chain to Johor, they may seek to divest or lease out part of their existing premises. This would give rise to redevelopment or asset enhancement opportunities and potentially spur relocation activities in the market. Singapore will continue to attract high-value manufacturing: Singapore remains a sought-after location for high-value manufacturing that are capital intensive and use highly automated factories, which typically require lesser land and labour. While cost remains a key consideration, some manufacturers prioritise talent availability, global connectivity and the business and research ecosystem in Singapore for their site selection.
3,571 sqkm demarcated
9 flagship zones
20,000 jobs to be created
JS-SEZ At A Glance
S$1.5 billion infrastructure development fund from Malaysia
MALAYSIA
Segamat
Mersing
11 key sectors including manufacturing, logistics, food security, tourism, energy, the digital economy, the green economy, financial services, business services, education, and health 5% special corporate tax rate for up to 15 years for companies investing in qualifying sectors, such as artificial intelligence, quantum computing supply chains, medical devices, aerospace manufacturing and global services hubs Singapore and Malaysia signed an agreement on the Johor-Singapore Special Economic Zone (JS-SEZ) in January 2025. Spanning an area that will include the Iskandar Development Region and Pengerang, the agreement aims to strengthen the value proposition of Johor and Singapore to compete for global investments together by improving cross-border goods connectivity between Singapore and Johor; enabling freer movement of people; and strengthening the business ecosystem within the region.
Johor
Yong Peng
Kluang
Muar
Iskandar Malaysia Region
Batu Pahat
F E
I H
A
B
D
Zone A Johor Bahru Business services, digital economy, health
C
G
SINGAPORE
Examples of Companies Leveraging SG-JB Complementary Strengths
Zone B Iskandar Puteri Manufacturing, business services, digital economy, education, health, tourism
COMPANIES SECTOR
MOVEMENT TO JOHOR
PRESENCE IN SINGAPORE
Zone F Sedenak Manufacturing, business services, digital economy, education, energy, food security, health, logistics, tourism
• Operated manufacturing facilities in Johor, expanding the group’s manufacturing capacity for Internet of Things (IoT) devices and data communication products • Opened its new facility in Johor’s Senai town, its second branch in Malaysia that can run up to four production lines for electronics. • Currently manufactured all its dairy-free cheeses in Malaysia through a partnership with an established Johor manufacturer • Plans to open a food processing facility in Johor Bahru, expected to be operational in mid-2026 • Collaborating with Malaysian state-owned Johor Corporation subsidiary FarmByte to set up one of the largest urban farms in Johor • Scaling down production in Singapore and looking at ramping up production in Malaysia • Eyeing land in Johor to expand operations • Malaysia will become the heart of RMS’ storage capabilities, with buffer and backup stocks housed in Johor
Electronics manufacturing firm Electronics manufacturing firm
Aztech Global
• Singapore remains the company’s headquarter
• Singapore will remain SP Manufacturing’s headquarter, as well as its centre for engineering and development work, and will lead the way for regional offices
SP Manufacturing
Zone C Tanjung Pelepas and Tanjung Bin Manufacturing, energy, logistics Zone D Pasir Gudang Manufacturing, energy,
Zone G Forest City Financial services
Agrocorp International
Agricultural trading firm
• Singapore remains the company's headquarter
Zone H Pengerang Integrated Petroleum Complex (PIPC) Manufacturing, energy, logistics Zone l Desaru Education, food security, health, tourism
• Retain a smaller farm in Singapore which will focus on research and innovation, including studying the best ways to increase crop size.
Agricultural technology firm
Archisen
logistics Zone E Senai-Skudal
• Uses warehouses and third-party storage in Singapore to serve its South-east Asian market • Day-to-day operations will remain in Singapore with vessels continuing to call at local ports
RMS Marine Service
Marine service provider
Manufacturing, digital economy, education, logistics, tourism
Fast-casual bakery and franchise
• Manufacturing facility cum storage area expected to be fully operational in 2025
Paris Baguette
• Maintain retail operations in Singapore
Source: Various media reports
Source: Business Times, Cushman & Wakefield Research
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Key Property Data
PIPELINE SUPPLY OVER CURRENT INVENTORY RATIO (%)
RENTS Q4 2024 (SGD PSF PM) 2025 FORECAST
VACANCY Q4 2024 (%) 2025 FORECAST
CURRENT INVENTORY (MILLION SF)
PIPELINE SUPPLY (MILLION SF)
CAPITAL VALUE OUTLOOK 2025
OFFICE (CBD GRADE A) RETAIL (ISLANDWIDE)* PRIME LOGISTICS (ISLANDWIDE) RESIDENTIAL (LUXURY CONDOS)
10.94
4.7
33.2
3.9
12%
29.77
6.2^
68.6^
2.0
3%
1.88
6.3
126.4**
12.7**
10%
5.57***
10.0***
76,923*** units
11,632*** units
15%
Source: Cushman & Wakefield Research * Prime units: Retail units that enjoy strong footfalls with good frontage and accessibility ^ Q4 2024 islandwide retail vacancy and inventory data from Urban Redevelopment Authority (URA)
** Q4 2024 conventional warehouses and prime logistics stock island-wide *** Q4 2024 Data for Private Residential Units in Core Central Region
SINGAPORE MARKET SNAPSHOT
Occupier Market Commentary and Recommendations Office: Tighter supply conditions may be met with steady office demand amidst a backdrop of gradually declining interest rates and steady economic growth. Retail: While the bulk of new retail supply is expected to stem from the suburban market, retailer demand for suburban retail space remains strong with new suburban malls seeing high occupancy rates. Retailers looking for cost effective options can look towards shophouses where rents are lower.
ease as more supply is introduced into the market. This presents a window of opportunity for tenants to negotiate more favourable terms amidst higher supply in the market. Residential: Rents are expected to stabilise and see mild growth in 2025, after a slight decline in 2024. Steady economic growth coupled with a low levels of new completions would be supportive of a return to growth for rents. Tenants can consider taking on longer leases given a limited new supply over the next few years.
Prime Logistics: The above-trend rental growth for prime logistics over the last few years is expected to
Economy Singapore’s economy is poised to see growth at 0%-2% in 2025. Overall economic indicators look resilient, with low unemployment, recovery in tourism, lower inflation and interest rates.
Investment Opportunities And Recommendations Investment sales volumes could sustain in 2025 driven by an increase of institutional grade assets made available for sale as some asset owners continue to seek to deleverage and recycle capital. This has given rise to opportunities especially in the office sector which continues to be weighed down by concerns of hybrid work. Despite low vacancies and rising rents, Singapore offices are seeing a mild re-pricing with two transactions of CBD Grade A developments at lower-than-expected prices. Singapore will face a constrained future supply pipeline across several sectors such as office, retail, hospitality, and private residential due to increased interest rates, higher construction costs, and economic volatility in recent years. Against this backdrop, we anticipate a pick-up in development activities as interest rates come down and economic confidence grows. Investors are increasingly drawn to the living sector, including hotels, co-living and senior living, and are seeking innovative strategies to adapt and repurpose older properties, unlocking their potential in this expanding market. Industrial volumes reached a 5-year high in 2024, with investors favouring new economy assets such as prime logistics and life science assets. This trend is expected to continue given secular trends such as the rise of e-commerce, digital transformation, demands for healthcare amidst an ageing population. Recent Significant Deals
As a small, open economy, Singapore will feel the impact of weaker global trade, but its strong fundamentals position it well to navigate these challenges.
Amidst global geopolitical uncertainty, companies may adopt a wait-and-see approach, delaying key decisions. Singapore’s safe-haven status could attract capital embarking on a flight to safety amidst times of uncertainty.
Key Market Developments KEY INFRASTRUCTURE/ECONOMIC DEVELOPMENTS (EXPECTED COMPLETION) • Tuas Mega Port (Phase 1: 2027, final phase: 2040s) • Terminal 5 Changi Airport (2030)
TYPE
IMPLICATIONS / AREAS TO WATCH • Higher warehouse demand in the west (Tuas, Pioneer, Boon Lay and Jurong East), and east regions of Singapore • Higher demand for properties in residential and industrial areas such as West Coast, Loyang, Defu, Toh Guan, Tengah etc. across the island • Boost demand for decentralised hubs such as Jurong Lake District, Punggol Digital District and Changi region • The SEZ is expected to strengthen both countries’ position to compete for global investments, attracting manufacturers who seek expansion opportunities in the region
• Infrastructure
• Cross Island Line (CRL) (Phase 1: 2030, Phase 2: 2032) • Jurong Region Line (JRL) (3 Phases: 2027 - 2029)
• Infrastructure
PRICE (MIL USD) / US $PSF
PROPERTY NAME BUYER
SELLER
PROPERTY TYPE
NET YIELD (%) DATE
Keppel’s Connectivity Division, Cuscaden Peak Investments Private Limited
Keppel DC Singapore 7 and 8 Concorde Hotel and Shopping Centre
Keppel DC REIT
Industrial
1,030* / 6,848 psf
6.5%
Q4 2024
• Johor - Singapore Special Economic Zone (Ongoing)
• Economic Scheme
Hotel Properties Ltd
Strata owners
Mixed
619 / 1,109^ psf
N.A.
Q4 2024
Singapore Land Group, UOL Grp Ltd, CapitaLand Development
Thomson View Condominium
Strata owners
Residential
612 / 504^ psf
N.A.
Q4 2024
Source: Cushman & Wakefield Research
CapitaLand Integrated Commercial Trust
21 Collyer Quay
Sunrise Capital Management
Office
511 / 2,322 psf
< 3.5%
Q4 2024
ION Orchard (50.0% Stake)
CapitaLand Integrated Commercial Trust
7.1% (Gross yield)
CapitaLand Investment
Retail
1,437 / 4,609 psf
Q3 2024
Portfolio of 7 Properties
Lim Chap Huat, Soilbuild Group, Blackstone
Warburg Pincus, Lendlease
Industrial
1,198 / 266 psf
N.A.
Q3 2024
Source: RCA, Cushman & Wakefield Research * Transaction is to be executed in stages ^ Based on potential GFA, excluding land betterment charge
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Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact
Key Property Data
PIPELINE SUPPLY OVER CURRENT INVENTORY RATIO (%)
RENTS Q4 2024 (MYR PSF PM) 2025 FORECAST
VACANCY Q4 2024 (%) 2025 FORECAST
CURRENT INVENTORY (MILLION SF)
PIPELINE SUPPLY (MILLION SF)
CAPITAL VALUE OUTLOOK 2025
OFFICE (KL CBD GRADE A) *RETAIL (KL CBD PRIME)
6.80
28.0
60.74
11.94
20%
219.32
12.1
18.94
2.14
11%
INDUSTRIAL (GREATER KL)
1.20 – 4.00
N/A
48,185 units
2,553 units
5%
Source: Cushman & Wakefield Research * Prime units: Retail units that enjoy strong footfalls with good frontage and accessibility
Occupier Market Commentary and Recommendations Office: The office market remains a tenant-favorable market, characterized by a surplus of available spaces
supply. To remain competitive, landlords are expected to renovate their existing properties to attract more tenants. Prime Logistics: As e-commerce continues to expand, particularly in the post-pandemic era, the demand for logistics and warehousing spaces in Malaysia is anticipated to rise considerably. Cold storage facilities are also expanding across the country as demand rises, including the establishment of a cold storage air freight hub in Sabah to boost seafood exports to Greater China.
MALAYSIA MARKET SNAPSHOT
for lease. With vacancy rates currently elevated, landlords are anticipated to adopt a flexible stance on rental rates, creating opportunities for tenants to negotiate favorable lease terms. Retail: While the influx of new retail spaces could impact current occupancy rates, the increase in civil servant salaries and the minimum wage is anticipated to boost purchasing power, affecting both demand and
Investment Opportunities And Recommendations New office developments are expected to see an increase in occupancy rates in 2025, with more relocations expected. Developers are broadening their investment portfolios by incorporating industrial parks and data centre developments, driven by the growing need for logistics facilities and digital infrastructure. Some major companies have made strategic moves in this area, tapping into the surge in e-commerce and the ongoing digital transformation. The consumer sector in Malaysia is forecasted to experience growth in 2025, supported by higher wages, growing disposable income, and steady economic conditions. This is likely to enhance the purchasing power of Malaysian consumers, which should have a positive impact on the retail sector. The continued development of infrastructure, especially in urban and industrial areas, is expected to further increase property values. Additionally, the government’s focus on economic recovery and pro-investment policies should promote growth.
Economy Malaysia’s economy is expected to see steady growth between 4.0% and 5.5% in 2025. The overall economic indicators are stable with low unemployment maintained, and the economy is expected to grow in both the services and manufacturing sectors. The minimum wage will increase from RM1,500 to RM1,700 per month, starting from February 1, 2025. The progressive wage policy will be fully implemented in 2025, with a RM200 million allocation aimed at benefiting 50,000 workers. After a consistent performance this year, the Malaysian property market is projected to continue its steady growth into 2025, with demand expected to be resilient.
Recent Significant Deals
Key Market Developments KEY INFRASTRUCTURE/ECONOMIC DEVELOPMENTS (EXPECTED COMPLETION) • MRT 3 Circle Line (Phase 1: 2028, Full phase: 2030)
PRICE (MIL USD) / US $PSF
PROPERTY NAME
BUYER
SELLER
PROPERTY TYPE
NET YIELD (%)
DATE
TYPE
IMPLICATIONS / AREAS TO WATCH
D’Pulze Shopping Centre
KIP REIT
Pacific Trustees
Retail
71 / 228 psf
7.1%
Q4 2024
• Infrastructure
• Higher office demand within outer KL CBD and KL Fringe areas
Tenaga Nusantara Sdn Bhd
Kluang Mall
Sunway Reit
Retail
35 / 98 psf
6.8%
Q3 2024
• The East Coast Rail Link (ECRL) (Phase 1: 2026, Full phase: 2027)
• Infrastructure
• Establish railway connection between West Coast and East Coast region
Wisma Damansara
BRDB Development
Selangor Properties
Office
105 / 178 psf
N.A.
Q4 2024
Sedania Innovator Berhad
Body Fashion (M)
Kelana Parkview Tower Office
0.67 / 61 psf
3.13%
Q3 2024
• Johor Bahru-Singapore Rapid Transit System (RTS) Link (2026)
• Infrastructure
• Catalyst for further development of Johor Bahru
Industrial Property
Crest Group
Oasis Harvest Corp
Industrial
3.66 / 622 psf
1.8%
Q4 2024
Source: RCA, Cushman & Wakefield Research
• Penang LRT Mutiara Line (Full phase: 2030)
• Infrastructure
• Connecting mainland to Butterworth. Starting from the reclaimed Silicon Island, will be a new job centre all the way to Komtar in the city centre
Source: Cushman & Wakefield Research
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CUSHMAN & WAKEFIELD
Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact
Key Property Data
PIPELINE SUPPLY OVER CURRENT INVENTORY RATIO (%)
RENTS Q4 2024 (RP PSQM) 2025 FORECAST
VACANCY Q4 2024 (%) 2025 FORECAST
CURRENT INVENTORY (MILLION SQM)
PIPELINE SUPPLY (MILLION SQM)
CAPITAL VALUE OUTLOOK 2025
OFFICE (CBD GRADE A)
303,000
24.0
5.2
62.5
1.2%
RETAIL (JAKARTA)*
1.0 m*
22.3 ^
4.8 ^
92.6
1.9%
WAREHOUSE/ LOGISTICS (GREATER JAKARTA) LANDED RESIDENTIAL (GREATER JAKARTA)
79,000**
19.9
2.9
380
13%
12.6 m***
25.5****
443,810 units
12,896 units
2.9%
Source: Cushman & Wakefield Research *Retail centers in Jakarta for premium Ground Floor rents, units in million rupiah ^ Q4 2024 Retail vacancy and Inventory of overall Jakarta retail market, both primary and secondary area ** Reflects both conventional warehouses and modern warehouses in Greater Jakarta area. *** Average land price per sqm, units in million rupiah ****Cumulative vacancy rate of landed residential units in townships larger than 30 Ha, Greater Jakarta area
INDONESIA MARKET SNAPSHOT
Occupier Market Commentary and Recommendations Office: Vacancy is expected to improve further with the continuous absence of new office supply in 2025. Rental growth is expected to increase further following the period of expected political stability, against the backdrop of a recovering office demand and economic forecast.
Warehouse/Logistics: In 2025, the warehouse vacancy rate is expected to remain relatively unchanged from the previous year due to high new supply and market competition. The supply of new warehouses is expected to increase by 380,000 m² in 2025. Residential: The supply of landed housing in 2025 is projected to remain stable, supported by the government’s decision not to implement a planned 12% VAT increase and to continue 100% VAT subsidy for homes priced under Rp 5 billion in the first half of the year. Developers will focus on Middle and Lower-Middle segment developments driven by rising purchasing power and first-home demand, and various programs for low-income households.
Retail: With large retail projects covering 92,600 m² are expected to be completed by the end of 2025, overall occupancy rates may slightly decline due to the increased supply. Rental rates and service charges are projected to remain stable, with a modest 0.4% increase in service charges anticipated in 2025.
Economy As one of the largest economies in Southeast Asia, Indonesia is projected to achieve GDP Growth of about 5.1%, driven by robust domestic consumption and strategic export diversification. With over 70% of its population under 40 and increasing investment in technology and infrastructure, Indonesia is set to make significant strides in economic growth. Macroeconomic stability is a cornerstone of Indonesia’s economic growth: inflation rate contained at around 3% and fiscal deficits reduced to 2.7% of GDP. Overall economic conditions look conducive for steady property demand in 2025, though the performance of each market segment would still be affected by their unique trends (ie hybrid work) in 2025.
Investment Opportunities And Recommendations Anticipating the near completion of MRT Jakarta phase 2A in 2027, year 2025 could be a right timing for developers and landlords to start development planning for commercial and residential properties along the Thamrin – Kota corridor such as supporting retail, condominium and small offices. In January 2025, Bank Indonesia lowered the benchmark interest rate to 5.75%, which is expected to impact mortgage lending rates offered by banks. This move is one of the factors driving developers’ optimism in releasing new housing supply, as mortgages remain the most preferred payment method, especially for landed housing. In 2025, the industrial and logistic sector in Indonesia is projected to grow through new government policies focusing on five priority sectors: leading natural resources (agriculture, mining, and marine), basic industries, services, skilled labor, and technology-intensive industries. New mall development in Jakarta will be limited, with development focus more on renovations and repositioning, to bring the projects up to date to the evolving consumer behaviors and market trend. Meanwhile, retail expansion is expected to accelerate in Greater Jakarta, driven by rising demand and growing consumer bases, offering promising investment opportunities. Recent Significant Deals
Key Market Developments KEY INFRASTRUCTURE/ECONOMIC DEVELOPMENTS (EXPECTED COMPLETION) • MRT Jakarta Phase 2 (Phase 2A: 2027, Full phase 2: 2032) • MRT Jakarta Phase 3 West – East Line (Phase 1: 2032) • New Capital city of Nusantara (Phase 2: 2029, Full phase: 2040s)
TYPE
IMPLICATIONS / AREAS TO WATCH
• Infrastructure
• Higher office demand and faster commercialization along the Thamrin – Ancol corridor. • Establishment of railway connection between West and East region of Greater Jakarta. • Rising demand for residential and commercial facilities to support the New Capital City of Nusantara, including the neighboring cities such as: Balikpapan and Samarinda.
• Infrastructure
PRICE (MIL USD) / US $PSF
PROPERTY NAME
BUYER
SELLER
PROPERTY TYPE
NET YIELD (%)
DATE
PT Simatupang Jaya Realty
Gedung Bata
PT Sepatu Bata Tbk Office
944
N.A.
Q1 2024
Source: Cushman & Wakefield Research
Subang Smartpolitan
BYD
Suryacipta Swadaya Industrial land
N.A.
N.A.
Q2 2024
Rajawali Property Group
Rajawali Place
Arsari Group
Office (5 floors)
N.A.
N.A.
Q3 2024
Plaza Galeon
RGE Group
N.A.
Office
N.A.
N.A.
Q3 2024
Source: RCA, Cushman & Wakefield Research
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