While Hong Kong and Singapore vie for top places in regional and global rankings, multinationals are turning their gaze, and wallets, to alternate locations in an attempt to avoid skyrocketing prices.
When polled during a recent Jones Lang LaSalle webinar, the majority of occupiers preferred emerging tier one cities such as Shanghai or Mumbai for their next real estate activity. Listen to the recording or read the press release of the latest ‘Timing is Everything’ webinar.
Many Asian domestic companies remain attached to the ‘Pearl of the Orient’ and the ‘Lion City’ provided they can afford the soaring market prices, but companies headquartered in other regions are keen to rent or buy in the emerging tier 1 or 2 cities (Figure 1).
Market sentiment suggests Asian countries won’t be immune to current global economic uncertainty and decelerating growth, but they should fare better than their Western counterparts. China and India remain the forerunners or ‘economic engines’, while smaller, fast-growing Asian markets remain optimistic.
Investing in alternate locations could prove timely and pay dividends for retail, manufacturing and service companies. There is much to capitalize on – rent is affordable, the expanding middle class provides an educated workforce that is relatively inexpensive to hire and retain. Infrastructure is improved, or in the process of being improved, while many governments offer incentives to businesses. Best of all, these up and coming cities offer maturing property markets.
The one-third of EMEA and US occupier respondents who cited tier 2 cities as their preferred real estate location demonstrates multinationals within Asia could be showing increased granularity moving forward.
That is, unless new regional hubs emerge alongside Hong Kong and Singapore?
About the author
Anne Thoraval is the Head of Corporate Research for Jones Lang LaSalle in APAC, based in Singapore