Chris Fossick: Funding ASEAN’s Future

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C Fossick headshotThis time at the Forum on ASEAN, which is taking place in the Cambodian capital Phnom Penh, there has been a lot of discussion about the potential impact of the demographic dividend from which the region stands to benefit.

ASEAN has 630 million people, of whom more than half are under the age of 30. This young and growing population provides a highly productive workforce which is embracing technology at a rapid pace.

In a talk on ‘Funding the Future’ the speaker showed a perfect triangle with the young at the bottom and older population at the top. This is the demographic dividend visualized. However over the coming decades, the dividend will start to deplete as people in the ASEAN countries age, live longer and the replacement rate falls as it has in many developed countries around the world. In other words, the triangle would turn upside down.

So why was this interesting? Because being late to the game in how to deal with an aging population gives ASEAN the opportunity to put in place policy, structure and mindsets to ensure there are adequate resources in place i.e. savings to fund an older population where there is lower productivity, less tax and higher health care costs. There is also a need to ensure that private individuals take on the responsibility of saving too and don’t rely entirely on governments as seen in a number of developed countries.

Where real estate comes in

Investment in real estate as an asset class provides a real and attractive opportunity for long term savings and growth. This could be in the form of people’s own homes to occupy or investing in additional properties to rent. It could also be investing into REITs. Real estate is a vital part of supporting the development of an economy and more capital to invest will increase the supply and, in turn, support the growth of that economy – a double benefit.

There is a real opportunity for JLL to be involved in the development of the real estate sector, particularly in some of the less developed parts of ASEAN. We are in a position to advise people on how to develop and access real estate opportunities to provide sustainable savings for their future. Now’s the time to make the most of the demographic dividend while also being aware that it won’t last forever.

For more on how a young population and an increasing focus on technology are shaping real estate in Southeast Asia, download our latest report here.

Chris Fossick is Managing Director, Singapore & Southeast Asia, JLL