Southeast Asian countries have the potential to leapfrog ahead of other developing nations by embracing new technologies to transform how people work, live and play, according to a new report by real estate consultancy JLL.
It’s all part of what is referred to as the Fourth Industrial Revolution.
The report, released ahead of the World Economic Forum on ASEAN, taking place in Kuala Lumpur, Malaysia on Wednesday and Thursday looks at how advanced digital technologies could impact countries in the newly established ASEAN Economic Community (AEC), a trading bloc of 10 Southeast Asian nations.
“In many ways, new technologies will allow people to bypass current constraints and leapfrog into greater efficiency,” explains Chris Fossick, MD, Singapore & South East Asia, with JLL.
“The impact on real estate and infrastructure in Southeast Asia is likely to be positive and transformational. If harnessed effectively, the changes will bring improved productivity, income levels and quality of life to the population.”
Southeast Asian economies are forecast to grow at 5 per cent annually until 2020, exceeding global growth of 3.5 per cent. The urban population in Southeast Asia’s cities is growing by around 2.2 per cent annually and the middle income population is set to increase by 70 million to 194 million by 2020.
Growth of shopping via mobile
In retailing, despite relatively low rates of PC ownership and internet connectivity, online shopping penetration is higher in Southeast Asia than in developed markets such as the US and UK. In fact, 50 to 80 per cent of consumers in Southeast Asia living outside cities are bypassing PCs to use mobile phones to shop online. But rather than negating the need for brick-and-mortar shops, JLL’s research suggests it will drive online retailers to expand into physical stores as more consumers choose to ‘click and collect’ purchases and test products in store.
New ways to work
In the sphere of work, demand for office space will change due to greater outsourcing from developed markets, more flexible work practices, and an increase in co-sharing spaces.
Regina Lim, national director, advisory & research, capital markets, with JLL and author of the report, says that while growth in demand for office space slowed after the global financial crisis, Southeast Asia has bucked the trend, with demand expected to grow at 6 per cent per year until 2020. “In particular, we anticipate strong growth in demand for office space in Manila and Kuala Lumpur.”
The report reveals that traditional corporate occupiers may be giving way to new models of working.
“While automation and artificial intelligence will eliminate some jobs, new jobs are likely to be created. Adoption of flexible working will continue to rise and by 2030, co-working spaces could make up 10 to 15 per cent of office stock in Southeast Asia, compared to only 1 to 5 per cent today,” said Lim.
Changes in lodging
In terms of accommodation, home-sharing platforms such as Airbnb and Homeaway will impact on both residential and hotel real estate in Southeast Asia. These platforms raise the efficiency with which property is used, freeing up spare capacity such as second homes. Thus there could be a reduction in the number of hotel rooms and residential apartments needed to accommodate the same number of visitors.
About the Fourth Industrial Revolution
The Fourth Industrial Revolution is characterised by “the fusion and amplification of emerging technology breakthroughs in artificial intelligence, automation and robotics, multiplied by the extreme connectivity between billions of people with mobile devices with unprecedented access to data and knowledge”, according to JLL.
The full report can be downloaded here.