The Yomiuri Shimbun
Residential buildings under construction are seen on the outskirts of Bangkok in August.

BANGKOK – Japan-affiliated property developers are stepping up their efforts in Southeast Asia thanks to the region’s economic recovery.

Although the novel coronavirus pandemic has temporarily halted construction and sales, recent housing market splurges by the wealthy and middle class have helped boost economic activity, which is increasingly returning to pre-pandemic levels. . However, real estate companies are now facing new challenges, such as soaring material costs and labor shortages.

On the outskirts of Bangkok, construction is progressing rapidly on a 115-unit condominium jointly developed by Kanden Realty and Development Co. and its local partner. Developers hope to woo wealthy local residents with a special “clubhouse” that includes a fitness center and other facilities.

Construction was put on hold in the summer of 2021 due to the pandemic, but work has now resumed for a spring opening.

“At one point, the future was uncertain,” said Kensaku Tanabe, head of the company’s Bangkok office. “But as the Thai property market has recovered, we have accelerated the work process.”

In July, Mitsui Fudosan Co. announced plans to open four serviced apartment properties in Thailand. “The timing of the announcement reflects the Thai government’s continued easing of entry restrictions for foreign travellers,” an official from the company’s public relations section said.

Market potential

Japan-affiliated businesses target Southeast Asia’s booming wealthy and middle classes.

According to the World Bank, Malaysia’s gross domestic product was $11,371 per capita in 2021, about three times higher than 20 years ago, while the figure for Thailand was $7,233, a multiplication by four over the same period. These numbers would likely be even higher if the data were limited to major cities.

In general, when GDP per capita exceeds $3,000, a country is considered a consumer society in its own right. In this context, the potential demand for real estate projects in Southeast Asia is high.

Although Southeast Asian countries impose restrictions on the purchase of real estate by foreign nationals, observers say regulations are relatively relaxed for high-end condominiums and other properties in urban areas in the world. purpose of attracting foreign investment.

Before the pandemic, many Chinese and other foreign nationals were buying such properties, but that trend has gradually slowed, in part due to coronavirus-related travel restrictions. But today, the real estate market is increasingly driven by the purchasing power of local residents.

Nomura Real Estate Development Co. and Isetan Mitsukoshi Holdings Ltd. are developing a complex in Metro Manila that includes condominium towers and commercial facilities. The high-end residential properties are designed around Japanese concepts and are selling well among wealthy local residents.

“Some wealthy people in Southeast Asia own two properties, one in the city center and the other in the suburbs,” said a person close to a major affiliate in Japan. “The market is solid.

Upcoming challenges

However, new challenges have arisen. Material prices have skyrocketed due to global inflation triggered by Russia’s invasion of Ukraine, and wage increases for local workers will be needed to keep pace with rising prices. which will eventually affect real estate prices.

In some countries, such as Vietnam, real estate markets are already showing signs of overheating, which could lead to further price increases. There is also a labor shortage in Southeast Asia. In Thailand and Malaysia, for example, many foreign workers have temporarily returned to their home countries amid the pandemic. But reintegration procedures take time, which has exacerbated the labor shortage.

An official from a large Japanese-affiliated company operating in Thailand said, “If the labor shortage becomes severe, it could delay our plans. We are doing everything we can to secure human resources,”

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