Thailand’s property market prospects are expected to be bright next year based on the country’s economic expansion, government spending on big-ticket infrastructure projects and the rise of the Eastern Economic Corridor (EEC).

Surachet Kongcheep, a property analyst, says market growth will mirror the country’s positive economic trajectory. Key factors boosting the economy are spending on the EEC and mass transit line expansion.

SET-listed contractor Ch.Karnchang Plc said new infrastructure projects that the government plans to open for bidding next year include the southern Purple Line from Tao Poon to Rat Burana — the largest one at 130 billion baht.

Other rail projects include the extension of the Blue Line from Bang Khae to Phutthamonthon Sai 4, worth 21.2 billion baht; the Orange Line from Thailand Cultural Centre to Taling Chan, worth 85 billion; and two extensions of the Green Line from Samut Prakan to Bang Pu and Ku Kot to Lam Luk Ka.

Nalinrat Chareonsuphong, managing director of property consultant Nexus Property Marketing Co, says GDP growth, which the government projects at 4% during 2017-20, will reflect overall expansion in each business sector. Kromchet Vipanpong, chief executive of property developer Asset Wise Co, says the property market will be boosted by economic growth, driven by healthy exports and a more positive political landscape.

Suwannee Wattanavekin, executive vice-president of Kiatnakin Bank Plc’s asset management department, says the property market in 2018 will continue to be dominated by large developers with their stronger financial status.

“Large developers shifted to the upper-end residential segment, where purchasing power was stronger than in the lower-end market,” she says.

She says small and medium-sized developers will be subdued next year because most of their products are in the middle- to lower-end segment or units priced lower than 3 million baht, which have seen a slowdown.

“Land prices will remain a key challenge that developers need to cope with, as they are a significant cost for property development. “Bangkok land prices tend to rise, particularly plots in prime locations. A new-high record price per square wah will definitely be reached next year.” Suphin Mechuchep, managing director of property consultant JLL Thailand, says.

Condominium sector

Mrs Nalinrat of Nexus says average condo prices in Bangkok have been healthy since 2015, when price growth for the first time outstripped Bangkok’s gross provincial product (GPP).
She says the super-luxury and luxury condo segments will keep attracting large and new developers, while prices will continue rising. More buyers will come from abroad, on top of those looking to invest in a second home.

In the high-end segment, the majority of developers will remain large firms that have the financial resources to buy land plots near mass transit lines in the inner city.

In the medium-end condo market, projects will remain in downtown locations and near mass transit lines. This market is where most buyers have stable income and really need a residential unit.

Office sector

Among all property categories, the Bangkok office sector will have the best trend in 2018, as existing supply cannot support strong demand, says Mrs Suphin of JLL. “The office market’s overall vacancy rate is only 9% this year, while office rents have risen every year over the past seven years and will continue to increase,” she says.

In 2018, all Grade A office towers in prime locations will gradually raise rental rates to higher than 1,000 baht per sq m per month.

Retail

Mrs Suphin of JLL says retail in 2018 will have limited growth as large developers like Central Group and The Mall Group focus on renovating their existing shopping centres rather than developing new ones.

At the same time, Bangkok’s discount store market is saturated, with big players like Tesco Lotus and Big C having expanded across Bangkok. These established companies will also focus on opening small-scale retail centres.

Hotels

The hotel sector has been active this year in terms of investment and the number of transactions. In the first three quarters, hotel transaction volume totalled 11.2 billion baht, the highest since 2014, Mrs Suphin says.

In 2018, hotel investment will see a positive trend as investors remain interested in acquiring them. The ability to turn a profit will remain a key factor prompting hotel owners to sell their assets.

Source: Bangkok Post