Research by Cushman & Wakefield recently published shows that artificial intelligence (AI) is forecast to boost economic growth and increase demand for commercial real estate across the Asia-Pacific (APAC) region.
Accordingly, AI will play a positive driving force for both economic growth and real estate demand, in the context that this region continues to consolidate its position as a global center for manufacturing, services and innovation.
There is a misconception that AI will reduce the demand for physical space. Our analysis shows the opposite - AI will expand economic activity and thereby boost real estate demand in many segments," said Dr. Dominic Brown - Head of International Studies for Asia-Pacific, Europe, Middle East and Africa at Cushman & Wakefield.
From the perspective of commercial real estate, AI is expected to play a supporting role for demand instead of replacing it, as economic output and the number of businesses increase, promoting space demand over time. This expansion will be accompanied by structural changes in space usage, as well as adjustments in investment strategy. Emerging assets, especially data centers, are expected to play an increasingly central role in the portfolio.
In the basic scenario, the return on core real estate is forecast to stabilize at around 10%, thanks to positive growth in the region and new demand drivers.
The logistics and industry sectors are forecast to be one of the main beneficiaries of AI application, with demand driven by automation, e-commerce growth and increasingly complex supply chains. In which, data centers are emerging as an essential infrastructure, with power supply becoming an important constraint factor, affecting both supply and investment decisions.
However, the retail market is forecast to be more clearly differentiated. High-end and popular segments are expected to perform better, while the mid-range segment will face structural challenges, reflecting an increasingly polarized consumer landscape.
Sharing her perspective on the Vietnamese market, Ms. Hoang Nguyet Minh - General Director of Cushman & Wakefield Vietnam said: "Applying AI from the research, development and operation management stage of real estate is essential in Vietnam before the impact of global AI as it is today, especially when the level of application continues to increase in many fields. Although the speed and scale of impact may be different, emerging markets like Vietnam have a favorable position to capture the growth potential from economic expansion thanks to AI.
The industry, which has been supported by strong production growth, export-oriented investment and expanded domestic consumption, is assessed to have a good position to continue to benefit from demand related to AI. At the same time, the data center market in Vietnam also shows significant long-term potential, based on competitive construction costs, the increase in AI applications and strong demand for cloud computing as well as the digital economy.
For offices and retail, AI is said to contribute to increasing the quality gap between buildings and especially shopping centers, while attracting higher demand for actual premises in Vietnam.
Although the overall outlook across segments is positive, the report also points out risks such as lower-than-expected AI productivity growth or labor market disruptions, which could lead to higher vacancy rates and downward pressure on rents.
