Rosalind Evans
As traditional real estate powerhouses like Singapore and Hong Kong face challenges, Asia’s lesser-known cities are stepping into the spotlight, offering better rental yields and showing robust growth in their rental markets. According to a recent study by JLL, cities such as Ho Chi Minh City, Jakarta, Bangkok, and Manila compete with and sometimes surpass the rental yields of their more established counterparts. This shift signals a notable change in the landscape of Asia’s rental markets.
Bangkok: A Hub of Luxury and Demand
Bangkok has experienced a significant increase in residential rentals, with a year-over-year growth of 18.1% in the first quarter of 2024. “Rental demand has been surging in Bangkok,” Roddy Allan of JLL Asia-Pacific explained, attributing much of this to the luxury condo sector. The city’s rental market is bolstered by vital tourism and the return of expatriates, further fueled by high interest rates and inflated property selling prices.
Future Prospects
The outlook for Bangkok remains positive. By the end of 2024, approximately 2,800 units from 12 new projects will be added, promising continued growth in rental demand.
Ho Chi Minh City: Vietnam’s Rising Star
Ho Chi Minh City has shown a steady increase in residential rentals, growing 5.9% year-over-year in early 2024. Allan highlights the influence of new, high-quality offerings that have supported more substantial rental prices.
New Supply and Demand Dynamics
More affordable housing options are expected to come online in the city, which, combined with ongoing economic pressures, should bolster rental demand further.
Jakarta: Stability Amidst Slow Sales
Despite a slowdown in condominium sales, partly due to the 2024 presidential election, Jakarta’s rental market remains strong, particularly in the high-end sector. Allan noted, “Demand for renting remains robust in Jakarta.”
Market Outlook
With new property launches expected to be limited in Jakarta throughout 2024, demand for high-quality residential spaces is anticipated to drive the rental market forward.
Manila: Steady Growth Despite Global Shifts
Manila’s residential rental market saw modest year-over-year growth of 0.8% in the first quarter of 2024. Demand from executives and foreigners has helped maintain a steady increase, supported by improving return-to-office rates.
Future Rental Market Trends
The stability in leasing demand is likely to persist as workplace policies continue to normalize, promising a steady growth trajectory for Manila’s rental market.
The dynamic shifts in Asia’s rental markets reflect a broader trend of emerging cities gaining prominence over traditional real estate hubs. As Roddy Allan of JLL points out, while established markets like Singapore and Shanghai are currently facing a downturn, the up-and-coming cities are thriving, driven by robust demand and strategic new developments. This evolving landscape presents new opportunities for investors and renters, looking beyond the conventional markets to these vibrant, growing cities.
