DTZ released its quarterly Property Times for Bangkok report recently and the news was mixed for the city’s real estate market in the first quarter. Condominiums in the CBD continue to perform well enjoying an average take up rate of 60 percent while the office market also had a positive outlook. However, the retail market could be facing some challenges in the near future.
Bangkok’s real estate sector expanded by 6.6 percent in the first quarter, an increase of over three percent q-o-q. Despite this, some developers are looking to change up their real estate investment strategies. Supalai, CP Land and the Erawan Group are all looking for more opportunities to invest abroad while Land & Houses is shifting its focus from residential projects to non-housing ones.
In terms of the residential market, the outlook is decidedly mixed with units in the CBD doing well but those situated in non-prime areas struggling. Projects in the high-end and luxury segment also continue to perform with Na Vara Residence by Navarang Asset selling out all its units shortly after being launched. The report noted that project launches in Bangkok are expected to pick up significantly during the remainder of the year. Many developers had delayed new project launches during the end of 2015 in order to focus on selling existing inventory.
The office market continues to arguably be Bangkok’s best performing one. The Property Times for Bangkok report is expecting vacancy levels to remain low and stock to remain limited, especially in the CBD. Average rent for grade A offices in the CBD set a new high this quarter climbing to THB783 per sqm. per month. This figure rose one percent q-o-q and three percent on y-o-y.
Bangkok’s retail market had a less optimistic outlook. More retail supply came online during this quarter increasing by 1.1 percent q-o-q and 4.7 percent y-o-y. Several new retail projects are also expected to open in 2016 and 2017 to add to this current supply. Both occupancy and rental rates remained stable during the first quarter but the new supply could see both of these decline between now and 2018.
