ASIA - Governments in Asian emerging markets must address onerous rules on foreign property ownership or risk losing overseas capital to more amenable regimes, according to JLL Thailand managing director Suphin Mechuchep.
Speaking at the World Economic Forum, Mechuchep said foreign ownership laws often represented efforts by emerging and frontier markets to protect local players endowed with fewer development skills and financial resources.
"For many Asian countries, including ASEAN, real estate markets are still in their early stages relative to their US and European counterparts," he said in a subsequent email.
"But, generally, property ownership and alien business laws are among the key obstacles for overseas investors. Those countries whose real estate laws are unclear or unfavourable will generally attract lower volumes of investment."
JLL managing director for Southeast Asia Chris Fossick, who spoke at the same session, pointed to strong regional market drivers including urbanisation, growing affluence and demand for social infrastructure such as hospitals and schools as a result of an increased focus on healthcare and education.
At the same time, intraregional and international tourism would boost demand for hospitality assets across the region, he said.
Fossick identified specific potential for investment in Myanmar's hotels sub-sector.
"It's already difficult to get hotel accommodation in Myanmar, particularly in Rangoon," he said. "Looking ahead, there is going to be clear undersupply."
Fossick also identified inward investment as the driver of increased demand for office and industrial space in the same market.
"If you're in the service sector, you'll need office space," he said. "If you're in manufacturing, you'll need production space."
Residential will emerge as an investible sector as economic growth drives domestic demand for higher-quality housing, though "this is some way off", Fossick said.
In the meantime, Mechuchep held out little hope of a regional solution to restrictive regulations in a significantly fragmented market, other than by setting up an ASEAN joint committee to come up with sector-based solutions for each market to adapt.
"It would be fundamentally difficult to address these issues on a regional basis because the laws in each country are vastly different and diverse, ranging from the most liberal countries such as Singapore and Hong Kong to less transparent frontier markets," he said.