Southeast Asian countries are winning manufacturers over from China owing to lower costs, rising domestic consumption and improving infrastructure, according to a report by property consultant JLL.

The consultancy’s top picks for investing in industrial real estate are Indonesia and Vietnam. It says it chose Indonesia because of the country’s large population base, stabilising currency and changes to its economic policy. Vietnam’s edge is in its young and skilled workforce, relatively low-cost base and stable political climate.

According to the report, the growth in manufacturing in Southeast Asia will come at the expense of China, which has been restructuring its economy towards domestic consumption, services and higher-value exports over the last five years.

The other concern is rising labour and land costs, which has caused China’s manufacturing exports to slow as companies relocate their manufacturing facilities to cheaper locations, such as Indonesia and Vietnam. As a result, export growth from Indonesia accelerated between 5% and 6% annually, while Vietnam’s exports grew 16% annually between 2011 and 2016, compared with just 6% in China.

In addition, JLL says its data shows that the Global Real Estate Transparency Index scores across Southeast Asia, particularly in those two countries, have improved in the last 12 years, giving international investors more confidence to enter those markets.