Will China's slowdown put a chill on Asian builders?

What a China slowdown means for Asian builders
What a China slowdown means for Asian builders   

A deepening slowdown in China's property sector has triggered fears over a domino effect on the region's construction industry, but there are some Asian builders who remain optimistic.

"There is a belief that if China slows down, the whole region will [follow suit] but I think that may not be the case," Jonathan Stein, managing partner of Chicago-based architectural and engineering firm S.O.M told CNBC's "Managing Asia" as part of the special series "Asia Builders."

"[The slowdown] is creating a lot of desire among the Chinese to export themselves into foreign markets so they're getting more aggressive in the region which in many ways is good," Stein added.

S.O.M is not alone in sharing that optimism. Thai property developer Pace Development told CNBC that the firm has benefited from lower costs of construction materials from China as mainland suppliers seek to gain a foothold in regional markets.

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"We see a number of Chinese contractors coming into Thailand with a very good rate. As a developer, we benefit," CEO Sorapoj Techakraisri said.

To be sure, not all industry players are as upbeat. According to a Thomson Reuters/INSEAD Asia Business Sentiment survey released last month, Asian builders polled a neutral outlook on the back of an increasingly-sluggish Chinese real estate sector, compared to a 75 reading in the preceding quarter. A reading above 50 indicates an overall positive outlook.

Indonesian construction firm Wijaya Karya, for instance, is worried that the move overseas by Chinese firms could increase competition for building projects.

"It's difficult to compete with China's construction sector when they have low-cost materials and labor. Sometimes we [strike] alliances with them for new projects but they are still a big threat," said Bintang Perbowo, president director of Wijaya Karya.

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Chinese construction crew dismantles a building in Pudong, Shanghai, China.
xPACIFICA | The Image Bank | Getty Images
Chinese construction crew dismantles a building in Pudong, Shanghai, China.

Asia's potential

As Asia's rapid growth fueled a construction boom in recent decades, emerging markets are increasingly offering more compelling opportunities. While issues like corruption and opaque regulations remain, industry players say political developments in the region have seen improvements.

Prospects in Indonesia, for one, is looking up as the Southeast Asian country's new president Joko Widodo – first Indonesian leader from outside the political or military elite who has promised a government free from graft – took office this week.

"The mandate to end corruption was part of his rise to power so I think he will make a good impact," said Wijaya Karya's Perbowo. "His other priority is infrastructure and that means demand for real estate and public-private partnership. That's a growth opportunity,"

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Developers who attended the "Asia Builders" conference also cited Myanmar as another market offering compelling growth. The ex-British colony was under military rule until 2011 when President Thein Sein, a former military commander who adopted a moderate and reformist stance concerning the country's political system, spearheaded unprecedented change.

"The reforms are not only good for business [but] we have seen great strides in changing Myanmar into a nascent democracy," said Serge Pun, chairman of SPA Group. "That would build a very different foundation which we will probably yield the positive effects 15 years down the road."

— Reported by Christine Tan, Written by See Kit Tang