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Thailand Real Estate Market Offers Opportunities Despite Uncertainties In 2019

Editor: Cheyenne Hollis
Pages 22 – 23, Dot Property Magazine ISSUE 026 Q1 2019

This promises to be an interesting year for the Thailand real estate market with both opportunity and uncertainty present. This was the main takeaway from the Thailand RealEstate Market Outlook 2019 from CBRE Thailand. The Bank of Thailand enacted regulations that require higher down payments for home loans that took effect in April. CBRE noted this is likely to cool the residential market with demand from speculative buyers and buy-to-rent investors falling. Looking towards the horizon, further challenges in the form of the new Bangkok City Plan and the new Land and Property Tax. Both of these will likely be finalized and activated in 2020 and could end up raising taxes, especially in areas where mass transit lines intersect, according to CBRE Thailand’s Managing Director Aliwassa Pathnadabutr. Buyers can benefit from the shift to the luxury majority of developers in Bangkokhave shifted their focus to building upscale condominiums at or around the THB250,000per square meter price point. CBRE found there are slow sales in many projects and developers with completed projects are now offering discounted prices to clear unsold inventory. And this is only half the story. In order to differentiate their condominiums, developers have had to think outside the box to create unique selling points in order to attract buyers. A few examples of this are home automation, rental management schemes, and mixed-use developments.CBRE Thailand believes these factors have created a buyer’s market for end-users and long-term investors in 2019. Those looking fora new condo in the first half of this year will be able to choose from a long list of quality developments, many of which will have units available at a discounted rate. Foreign buyers remain vital for Thailand real estate market The Thailand real estate market continues to be dependant on overseas buyers. This reliance may be even more evident in 2019 when the new mortgage policy kicks in. If domestic demand falls as expected, many homebuilders will steps their efforts to woo foreign buyers whocan pay for units outright. According to Alissa, there are uncertainties in the sustainability of this strategy. Overseas buyers may not transfer their unit upon project completion and there are questions as to who will be living in these units. Additionally, foreign demand is sensitive to the buyer’s local economy. Demand from Chinese buyers rose by almost40 percent from the previous year and they were the most active buyers by a wide margin, CBRE reported. Hong Kong buyers registered the second most demand with the consultancy, but this was down from 2017. There was also a noticeable drop in demand from European buyers in 2018. Retail and office sectors mustadapt Another Thailand real estate market trend is the changing office and retail sectors. Offices have been forced to adapt to the desire of agileworkplaces and co-working firms gobblingup large amounts of space across Bangkok.Meanwhile, older office buildings are going to need to renovate and upgrade in order to remain competitive.CBRE Thailand research noted that more than two million square meters of office space from under construction and planned projects will enter the market during the coming years. As for the retail segment, competition fromboth e-commerce and a wave of new shoppingcentres will put pressure on malls in poorlocations or with no drawing power to attract people.“Bricks-and-mortar retailers are strategizing to offer something that cannot be offered online, introducing the experience-rich shopping centers or the ‘retailtainment’ destinations,” James Pitchon, CBRE Thailand ExecutiveDirector, explained. The presence of e-commerce looms large over the retail sector, but it has also opened up anew area of the Thailand real estate market,logistics. Once related to talking of sheds, thethreat of a US-China trade war has madelogistics sexy.CBRE found that demand for various industrial properties from Chinese companies picked upsignificantly last year and the trend will likelycarry over into 2019 as they look to movemanufacturing outside of mainland China to avoid tariffs.

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