Based on Edmund Tie & Company Research Bangkok’s condominium market was upbeat, as demand showed signs of improvement. The pre-sale levels of new projects in the CBD averaged 67% in Q1 2017, higher than the 64% in Q1 2016. The average unit selling price for new condominium units was similar to Q4 2016 at THB246,380 per sq m, but this represents an increase of 7.1% y-o-y.
2017 Q1 SNAPSHOT
Thailand’s economy grew by 3.2% in 2016, an improvement from the 2.9% growth recorded in 2015. The Consumer Price Index (CPI) in Q4 2016 also increased by 0.7% y-o-y. The policy rate remained unchanged at 1.5% as of February 2017, as the current rate remains accommodative for the economic recovery. Notwithstanding, Gross Domestic Product (GDP) in Q4 2016 expanded by 3.0% y-o-y, lower than the 3.5% y-o-y in Q3 2016.
THE ECONOMY Key Highlights in Q1 2017
- The policy rate remained unchanged at 1.5% in February 2017.
- The Consumer Price Index (CPI) in Q4 2016 increased to 0.7% y-o-y.
- The annual inflation forecast ranged between 1.5% and 2.0% in 2017.
- Gross Domestic Product (GDP) expanded by 3.0% in Q4 2016.
- The anticipated growth in the economy in 2017 is in the range of 3.0-4.0%.
INVESTMENT SALES Key Highlights in Q1 2017
- Investment sales accounted for THB19.09 billion, increasing from THB10.18 billion in Q4 2016, which translates to 87.5% q-o-q growth.
- The investment market was once again dominated by domestic investors, accounting for THB10.69 million.
- The largest investment deal was from Apollo and Goldman Sachs, both American companies, accounting for THB8.4 billion.
- Bangkok was the focal point for real estate investment, with investors concentrating on mixed-use projects and hospital businesses in the capital.
- Outside of Bangkok, the sectors invested in were more varied, with as light emphasis on the industrial sector.
OFFICE REAL ESTATE Key Highlights in Q1 2017
- Office occupancy in the CBD decreased to 90.3% in Q1, down from 90.0% in Q4 2016.
- Average asking rents in the CBD remained stable q-o-q at THB805 per sq m per month in Q1, but this represented an increase of 2.8% when compared to that of Q1 2016.
- Total office supply in Bangkok’s CBD remained unchanged at 1.8 m sq m in Q1.
- In the CBD market, there is approximately 137,596 sq m of office space currently under construction.
RETAIL REAL ESTATE Key Highlights in Q1 2017
- Average rents in the downtown areas in Q1 decreased to THB2,600 per sq m per month, down by 1.14% on a y-o-y basis.
- The average rent in midtown areas was stable at THB1,590 per sq m per month.
- Total retail stock in the downtown market was 1,331,968 sq m in Q1. Retail supply has remained unchanged since Q1 2016.
- Retail supply for the midtown areas was recorded at 891,739 sq m in Q1, increasing by 12.9% on a y-o-y basis.
- Retail occupancy rates in Q1 in downtown locations dropped to 92.7%, down from 92.8% in Q1 2016.
RESIDENTIAL REAL ESTATE Key Highlights in Q1 2017
- A total of 2,367 units from 7 new condominium projects in the CBD market were launched.
- The majority of the condominium units launched in this quarter were from the high-end segment, representing 56.0% of the total new supply.
- The average take up rate in the CBD was 67%, higher than the 64% in Q1 2016.
- The average unit selling price for new launches remained unchanged at THB246,380 per sq m, but represented an increase of 7.1% on a y-o-y basis.
- The resale price index increased to 150.0 from 143.7 in Q4.
The supply of condominiums started to improve. Major developers started to launch new condominium projects in the CBD market, especially in the high-end, luxury and super luxury sector.
Outlook
Bangkok’s overall condominium market started to show signs of improvement after many planned condominium projects were pushed back during the mourning period in the fourth quarter of 2016. It is anticipated that major developers will start to roll out their new projects this year. The challenge now is for the developers will be to identify and acquire land to develop new projects and to select the marketable segments for those sites. Investment and sales activities will focus mostly on popular locations and segments that have higher take-up rates.
Sales and marketing activities for condominium developments will return to normal. The average unit selling prices in the CBD district is expected to rise. Demand for new units is expected to improve, as consumer confidence has gradually recovered. Condominium buyers and investors will continue to gain confidence with purchasing premium condominium properties in the CBD market as the market is very active.
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