Thailand Developers Facing Challenges in 2018

13 มี.ค. 2561

Thailand Developers Facing Challenges in 2018

The growth of the real estate market in Bangkok has been significant over the last 5 years with a large amount of condo projects, retail space, and office buildings all launching. However, new challenges are emerging for developers and they will have to adjust their strategy moving forward, according to JLL.

“Rapidly rising land costs continue to represent a significant challenge for the market today. The recent annual increases around the market of 10-15 percent per year are pushing developers in new directions,” says Andrew Gulbrandson, Head of Research at JLL, in a press release.

For most developers, it is no longer financially feasible to purchase freehold land in the city centre for office, hospitality, or retail uses as it won’t bring in enough revenue. This has seen some investors look for long-term leases for new commercial and hospitality developments in prime locations.

“Asides from rising land costs, there are numerous other challenges facing investors in certain market sectors, one of which is intensifying competition. To ensure success, and indeed the happiness of shareholders in many cases, market leaders are taking a variety of steps as they pursue growth objectives,” says Gulbrandson.

Some residential developers in Thailand are now targeting higher price products that are attractive to both local and foreign buyers. Others are looking to form joint venture partnerships with foreign investors to reduce some of the financial burden while other Thai developers are exploring international opportunities.

“As Thai investors seek to diversify, a handful are looking for opportunities outside of Thailand. Investors with strong hospitality experience such as Minor Group, Central Plaza Hotel (Centara) and Singha Estate are likely to continue overseas expansion efforts as are industrial leaders like Amata and Frasers Property. That said we expect that most local players will continue to deploy all of their capital in Thailand,” says Gulbrandson.

More insights about Bangkok property market, check out DDproperty Property Index Report and DDproperty Property Market Outlook Report and find out how much you can afford for  your new house, try our mortgage calculators . 

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