The ASEAN Economic Community (AEC), which has been in place since early this year, will breathe new life into the office and retail market in the region in general and Vietnam in particular, property service provider CBRE said in its recent report.

CBRE projected that industrial space and office supply and demand would increase in most ASEAN markets in the short and medium terms given the establishment of more small and medium-sized enterprises and the presence of more multinational firms. The growing industrial real estate market will also boost office supply as multinational companies will join the market.

However, there are a number of challenges out there in the market. Desmond Sim, CBRE head of research for Singapore and Southeast Asia, said that obstacles remain in the AEC region.

Poor management and oversupply may lead to unstable retail rents, causing difficulties in retailers’ business expansion.

The shortage of skilled staff will hinder operations of industrial producers, resulting in a slow development of the office and industrial segment in the short and medium terms. The wide difference in professional skills among member countries will also affect positive impacts of labor liberalization in the bloc.

The expert was also concerned about a lack of supporting policies for real estate investment. Investors often face limitation in land ownership transfer to foreigners and short rent time.

A favorable investment environment will support foreign direct investment (FDI) inflows and improve the general development process of ASEAN. Therefore, each member state should review land ownership laws to encourage foreigners to take part in trading, Sim proposed.

The diverse property development of the region has offered more opportunities to investors. Developed markets like Singapore and Malaysia can provide players with ‘core’ or ‘added value’ opportunities while temporary opportunities can be found in emerging markets like Vietnam and the Philippines.

Therefore, CBRE predicted that more capital will flow into the ASEAN property market  as many investors have been searching for new markets in the past year.