While Singapore and Hong Kong have long been regarded as Asia’s real estate powerhouses, a recent report by realty services firm JLL suggests that several up-and-coming cities are shaking up the status quo, outperforming these traditional hubs in terms of rental yields. These emerging markets are not only attracting attention but also offering lucrative opportunities for investors seeking high returns.
Hong Kong remains the sole representative from the established markets in the top five, with lesser-known cities dominating the rankings. According to Roddy Allan, Chief Research Officer for JLL Asia-Pacific, while the long-term outlook for established markets like Hong Kong remains positive, the spotlight is now on developing markets such as Ho Chi Minh City, Jakarta, Bangkok, and Manila, where conspicuous rental growth is driving investor interest.
The first quarter of 2024 saw stable rental trends in the Asia-Pacific region, buoyed by resilient leasing demand and improved return-to-office rates and expatriate arrivals. However, certain cities experienced significant growth, signaling a shift in the real estate landscape.
Leading the rental growth surge is Bangkok, Thailand, with a remarkable year-on-year increase of 18.1%. The surge in demand for rentals, particularly in the luxury condo sector, has been fueled by favorable rates and the resurgence of tourism and expatriates.
Ho Chi Minh City, Vietnam, emerges as another top performer, boasting a 5.9% year-on-year rental growth in the first quarter of 2024. The city’s residential market is witnessing increased demand, driven by new high-quality offerings and ongoing rates pressures.
In Jakarta, Indonesia, despite sluggish condominium sales, rental demand remains robust, especially in the upper end of the market. Limited new launches are expected to further drive demand for high-quality spaces throughout the year.
Manila, Philippines, rounds out the list with a modest yet steady rental growth of 0.8% in the first quarter of 2024. Demand from executives and foreigners, coupled with improving return-to-office rates, continues to bolster the residential rental market in the city.
In contrast, mature markets like Singapore and Shanghai have experienced declines in residential rental markets, attributed to ample new stock and subdued demand.
Looking ahead, while these emerging rental markets present lucrative opportunities, the recovery in more mature markets like Mainland China and Singapore is expected, driven by subdued supply and a rebound in expatriate demand. As the real estate landscape continues to evolve, investors will need to navigate these shifting dynamics to capitalize on emerging opportunities and mitigate risks effectively.
You Might Be Interested In:
