Southeast Asia's real estate markets are entering a period of “complex but compelling opportunity”, with investors rotating toward sectors tied to manufacturing expansion, digital infrastructure and domestic consumption, according to the Asia Pacific Real Assets Association (Aprea).
While escalating tensions in the Middle East have heightened concerns over energy prices, inflation, and investor sentiment, the global macro environment adds further nuance, reads Aprea’s latest report, released May 25.
Logistics, data centres and affordable mid-market urban residential will be the “most resilient opportunities across the region” over the next three to five years, says Chris Marriott, CEO of Savills, Southeast Asia.
“Rather than focus on the disruption from the Middle East conflict, it’s important to understand the long-term structural shifts being driven by an increasingly multipolar and fragmented global environment,” says Marriott to Aprea.
Vietnam and Indonesia continue to benefit from supply chain diversification and geopolitical neutrality, he adds, while the Philippines and Thailand face greater near-term exposure as net energy importers.
In fact, demand for industrial and logistics space is outpacing supply in Vietnam and Indonesia, where multinationals have accelerated factory relocations amid ongoing trade realignment. Malaysia and Indonesia are emerging as the region’s next data centre hubs as hyperscalers exhaust available land and power capacity in Singapore, according to Marriott.
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Interest rates are “unlikely to ease meaningfully this year”, he adds, though the region’s “historically conservative use of leverage should cushion the impact”. “Selective deal activity [is] expected to pick up as pricing expectations become more realistic.”
Vietnam: improving infrastructure, proximity to China
Vietnam stands out as one of the strongest real estate growth stories in Southeast Asia, with industrial and logistics assets the highest-conviction theme. Michael Piro, co-CEO of Indochina Capital, says Vietnam is “one of the most compelling growth stories in Asia”, pointing to the country’s position as a major beneficiary of the China-plus-one strategy.
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According to Piro, global investors have taken “significant positions” in ready-built factories and warehouses, particularly in northern Vietnam, where improving infrastructure and proximity to China are boosting occupancy and rental growth.
Hospitality is also emerging as a bright spot, with Middle East tensions redirecting travel demand toward Asia, adds Piro.
“I see a clear barbell strategy emerging; industrial for structural growth and durability and hospitality for pricing power and cyclical upside,” Piro says.
The Philippines’ many resilient plays
The Philippines continues to draw investor interest despite global volatility and inflationary pressures, with demand anchored by sectors offering stable consumption patterns and recurring income. Malls, logistics, data centres, offices and hotels are expected to remain the Philippines' most resilient property plays, according to Aprea.
“In today’s macro environment, sectors that offer recurring income, long-term visibility, and protection against volatility are the most attractive,” says Jericho P. Go, president and CEO of RL Commercial REIT Inc.
Mall assets stand out for their guaranteed lease structures that combine minimum base rents with percentage-of-sales upside, while logistics facilities are equally compelling, benefitting from long-term leases with built-in rental escalations that hedge against inflation while supporting supply chain requirements, he adds.
The luxury residential market is also outperforming, with Manila ranking third in Knight Frank’s Prime International Residential Index (Piri), released in April. Hospitality is regaining momentum as international operators expand and global brands re-enter key destinations, while the office market remains tenant-led, with competitive rents reinforcing Manila’s position as an affordable regional hub.
Data centres are gaining ground as hyperscalers increasingly partner with local developers, according to Rick Santos, chairman and CEO of Santos Knight Frank.
“The current macro environment is effectively acting as a filter — separating sectors with structural demand from those still dependent on cyclical recovery,” notes Santos. “What we’re seeing is a pause, not a retreat.”
Malaysia the region’s next data centre hub
Malaysia is emerging as the region’s next data centre hub, with JLL ranking it among the world’s fastest-growing data centre markets.
Data centre-linked properties are seen as particularly resilient, driven by rising demand for cloud computing and AI applications, as well as the limited supply of prime land in key hubs such as Johor and the Klang Valley, according to Area Management Sdn Bhd.
Stewart LaBrooy, executive chairman of Area Management, says: “Industrial assets, including data centres and modern warehouses, are the clear winners from digitalisation and supply chain realignment.”
Separately, investors are increasingly targeting sectors offering stable, defensive income streams such as purpose-built student accommodation, healthcare facilities, international schools, and select retail and office properties tied to tourism and ESG-driven demand trends, according to Yulia Nikulicheva, head of research and consultancy for Malaysia at JLL.
Green-certified buildings offices are maintaining occupancy rates of about 87% despite overall Greater Kuala Lumpur vacancy of 25% to 30%, notes Nikulicheva.
The Middle East war is driving capital toward stable, neutral markets such as Malaysia, Labrooy says. Despite risks from higher oil prices and inflation, investor sentiment remains resilient, with Malaysia increasingly viewed as a defensive haven, he adds.
