CBRE Research has released a special report on “Bangkok Real Estate Market Outlook 2017” which covers residential, office, retail, capital markets and industrial and logistics sectors. The overall economic outlook for Thailand looks set to mirror that of the past year, with the Bank of Thailand (BOT) maintaining its economic growth forecasts of 3.2% for 2016 and 2017.
External factors pose greatest challenges to Thai economy The prospect of protectionist US trade policies towards China represents one of the major risks to the Thai economy over 2017, with a lower volume of Chinese exports to the US in turn reducing Thai shipments of raw and manufactured products to China for re-export. Greater foreign Investment While no fundamental shift in the dominance of prominent local developers is set to occur over 2017, market interest shown by foreign groups in Thailand, combined with cautious domestic bank lending, has created a favourable environment for increased activity from overseas investors and a clear catalyst for greater inbound investment in the Thai property market over the year. Demand for prime land sites to continue CBRE Research believes that the price of prime Central Business District (CBD) land in Bangkok will continue to increase as downtown condominium demand continues to remain strong with prices projected to increase further over 2017.
CBRE Research is confident that the land price record will be broken again in each CBD location. Residential buyers more selective, developers to increase overseas project marketing CBRE believes demand for high-end and above condominium projects will remain strong over 2017 although buyers will become more selective. Demand will continue to be driven largely by Thai buyers, accounting for 85% of the buyers. Developers are expected to continue to explore overseas sales opportunities, building on the success of projects actively marketed internationally in 2016 , with units priced below 10 million THB proving popular among international buyers.
Thailand has the added benefit of no punitive stamp duties for foreign nationals, unlike markets such as Singapore and Hong Kong, which serves to heighten the appeal of Bangkok property. Growth in office rents CBRE Research expects rents to continue to rise over 2017 as healthy demand and limited new supply act as drivers to growth. Take-up rate is anticipated to remain strong at the level of 200,000 square metres per year. CBRE observed rising occupier interest in workplace strategies. Pre-leasing demand will continue for high-quality office projects. CBRE believes that overall occupancy will continue to grow and that office rents will rise in the region of 5-10% over the coming 12 months.
Retail landlords to focus on Bangkok’s profile as food destination Retail landlords will continue to focus on creating experiences that cannot be replicated by online sales. Competition will be fierce and only the strongest centres in each location will prove viable moving forward. The expanding food and beverage sector is going some way to support this, with Bangkok building a reputation as a food destination, in addition to becoming a luxury retail hotspot, regionally.
Growth in CLMV region and e-commerce bode well for logistics sector Due to Thailand’s geographical location at the centre of CLMV region, CBRE Research believes that Thailand has the potential to develop into a regional logistics hub, capitalising on high regional GDP growth rates. While currently accounting for a small proportion of overall retail sales, the continued growth of Thai e-commerce will create greater demand for logistics space. Online retailers typically require three times the physical space of a conventional retailer, due to greater product offerings, larger inventory and the need to facilitate reverse logistics, where customers return goods.