Commercial Real Estate Market in Thailand - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Commercial Real Estate Market in Thailand - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Thai economy is expected to grow in 2020, as its tourism and exports are a steady growth indicator. The number of expats applying for work permits, as well as foreigners, who want to live in Thailand full-time, continue to rise steadily. The Thai property market is in a slow but consistent upward trend for over a decade now.

The Thai commercial estate market is growing marginally and most likely to grow weakly in 2020. There has been tighter mortgage regulation, higher interest rates, and slowing economic growth, not to mention the country’s volatile political situation. Foreigners are restricted in their activities to invest in commercial real estate property by both the Thailand Land Law Code and the Thailand Foreign Business Act. Low and medium-priced properties in the suburban areas that are mainly built to cater to Thai buyers, have seen a greater oversupply.

Thailand offers among the regions’ lowest living costs and office rentals. The office real estate market in Bangkok is changing with the trend of the active workplace, and co-working space is playing a major role in leasing large amounts of office space in Bangkok. The incoming new supply is expected to put pressure on older office buildings to renovate and upgrade them to be competitive in the changing market. Bangkok features the region’s best cost of living to development ratio as well.

The expansion of existing companies and the emergence of new companies in the logistics market have increased the demand for modern logistics properties (MLPs) in Thailand. The fast growth of e-commerce has fuelled the demand for logistics real estate in Thailand. The average occupancy rate of all industrial estates in Thailand is approximately 90%.

Key Market TrendsGrowth in Tourism Is Driving the Market

40 million international tourists were expected to arrive in-country in 2019, driven by the growth of Chinese tourists who now comprise 60% of the total tourist arrivals. Countries from East Asia remained the largest contributor to international tourists’ arrival. With the rising tourist arrivals, the average occupancy rate at Bangkok downtown hotels has steadily risen to almost 75%. However, the room rate has remained relatively flat.

Thai-property is still affordable compared to other countries in the region, like Mainland China, Singapore, and Hong Kong. Buyers from these countries still see Thailand, and especially Bangkok, as attractive spots to buy the property. The combination of buoyant tourism and Chinese demand should mean that the market may regain momentum in 2019 and further.

Increasing Foreign Direct Investments in Thailand Property Market

In recent years, minor changes in Thai law allowed non-residents to further explore the Thai real estate market. There was a rise in FDI investment in real estate activities in Thailand in 2018 compared to 2017. According to source, there is a surge in real demand from foreigners despite challenges, as they account for 30% of total sales. Foreign direct investment from major investors, mainland China and Hong Kong, is also likely to increase, due to Beijing’s trade dispute with the United States.

Bangkok is a popular investment destination for foreigners. The Bangkok metropolitan area was a prime investment location for China. Thai banks are being conservative about new project lending to developers, hence, Thai developers are seeking funding from foreign partners. Most joint ventures, as of now, have been with Japanese investors on a project-by-project basis.

The luxury segment continues to attract a vast number of foreigners with properties located in the central areas. Many new and existing industrial estates are expanding being developed in the Eastern Seaboard, as this area is the most popular location for foreign investors in Thailand.

Competitive Landscape

The Thai commercial real estate market is moderately fragmented, due to the presence of a cast number of players in the country. Property developers across Thailand are experiencing an alluring attraction for hotel-branded residences, in order to encourage price premium points and buyers’ demand. Several developers are also differentiating from build-to-sell residential projects toward build-to-hold income-producing assets, including serviced apartment buildings, offices, and hotels.

Industrial estate developers are more likely to focus on investments or developing new phases or projects in the future. Mixed-use development projects are trending in Thailand that offer hospitality and residential elements at the same time. Major real estate players in the Thai residential market are Sansiri Public Co. Ltd, Supalai Company Limited, Property Perfect, and Pruksa Holding.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

Developers
Real Estate Agencies
Other Companies (start
ups, associations, etc.)

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