San Francisco, CA- Chinese investors who are concerned about potential slowdowns in their home country are turning to Southeast Asia, particularly Indonesia, for future property investment.
Numerous Chinese Indonesians control substantial segments of the Indonesian economy, making investments there more attractive.
Companies, such as Singapore-based Yishan Capital Partners, recently launched a fund to invest in Southeast Asia, with the ultimate goal of investing as much as $250 million. As much as $25 million in assets have already been targeted.
Yishan has already made four investments in Indonesia and are targeting neighboring nations, such as Cambodia, Malaysia, Myanmar, Singapore, and Thailand as well.
"We have been very vocal that there is not going to be a lot of excitement about real estate in Europe. It's going to be pretty static," said Yishan managing partner John van Osst. "In terms of yield, you can get that in Europe. But the growth has to be in Asia."
So far, Indonesia has posted a 6.2% gross domestic product growth in the third quarter this year, which is only slightly lower than the numbers posted for the first two quarters. Domestic demand for products remains high even as imports have slowed slightly.
An overall 6% growth is expected for the Asian nation, for both this year and 2013. That growth is thanks in part to increased investment spending and consumer demand. At that rate Indonesia only trails China in the region.
There are a number of reasons for optimism in Indonesia these days. The government is considered highly stable and has fundamental plans in place for future development. Real estate brokerage firm Jones Lang LaSalle recently called the nation "one of the bright spots in the regional economy".
Van Osst say that his company is especially targeting warehouse space, which benefit from strong domestic demand and growth in consumer spending on Indonesia. Yishan has invested in logistics centers in Jakarta and Surabaya, along with a residential project in the nation's capital and a shopping center in Bali.
"There is certainly an interesting property story going on in Indonesia at the moment," said John Saunders, private-equity property specialist and chief executive for Asia of MGPA, based in Hong Kong. "My slight concern is that in some of these markets there is a lot of land available. The rents will go up and then everybody starts building because there is not too much of a constraint on supply. But it doesn't have the constraints of Hong Kong or Singapore."
Copyright © by the contributing authors, 2007-2025.