Bangkok’s popularity with institutional real estate investors has declined five places in an annual report which tracks investment trends among investors.
It the Emerging Trends in Asia-Pacific Real Estate report, published by pwc and the Urban Land Institute, Bangkok ranked 11th in investment and 12th in development. The report questioned 250 individuals about their investment intentions for 2014.
Bangkok was mentioned more frequently in this year’s interviews than previously, with investors seeing it as a relatively less competitive, higher return market than Asia’s more conventional destinations.
As one investor described it: “There’s not a lot of capital focused there, and you could maybe find some good opportunities in the core property sectors. There’s obviously a lot of risk with that, but there could be attractive opportunities, too.”
Prices and rentals continue to rise in Bangkok’s prime office space, although there remains very little investable stock. Vacancies have also been trending down for the last three years.
Still, Thailand has always been regarded as a hard market for foreigners to exploit. One investor said,
“It’s just difficult to get things to move quickly there—there are a lot of wheels within wheels and restrictions on foreign ownership that are a lot more draconian and hard to navigate compared to Indonesia and the Philippines.”
Foreign investors tend to prefer the resort markets on Thailand’s beaches to Bangkok’s commercial real estate.
They require a different set of management skills that international funds may find easier to exploit, “although a lot of these markets are suffering from some level of overbuilding,” as one investor with experience in the sector observed.
Tokyo came out as the number one choice in the report, having risen from 13th spot last year, although the report noted that the big question, however, is whether “Abenomics”—a vast program of government stimulus named after Shinzo Abe, the current prime minister of Japan—can successfully reverse that country’s long economic decline. The jury remains out on that, and for as long as it does, the buying in Tokyo looks set to continue.
Full report: http://www.uli.org/wp-content/uploads/ULI-Documents/Emerging-Trends-in-Real-Estate-Asia-Pacific-2014.pdf
Andrew
Batt, International Group Editor of PropertyGuru Group, wrote this
story. To contact him about this or other stories email andrew@propertyguru.com.sg
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