Thailand investor sentiment scored a massive boost in the second quarter of 2014, according to the Investment Market Update South East Asia Q2 2014 report published today by DTZ.
After falling for two consecutive quarters, real estate investment in Malaysia, Singapore and Thailand grew 9.3 percent quarter-on-quarter to US$4.8bn in Q2. This brought investment volume for H1 2014 to US$9.2bn, which was approximately 15 percent lower than the USS10.8bn invested in H1 2013.
Investment activity in Q2 was boosted by a surge in activity in Thailand, driven largely by the disposal of income-generating assets into property funds, despite the prolonged political tensions.
Property investment in Thailand increased more than six times to US$1.4bn, largely driven by the disposal of income-generating assets into property funds. The largest investment comprised the acquisition of 12 hotels in key destinations in Thailand including Bangkok and Phuket by the Thai Hotel Investment Freehold and Leasehold Property Fund (THIF) for an estimated US$808mn.
Going forward, DTZ expects real estate investment in Southeast Asia during 2014 to come in lower than last year’s US$26.4bn. This is in spite of more positive investor sentiment in Thailand, as possible interest rate hikes lengthen the time needed to negotiate and conclude deals.
In addition, Southeast Asian investors have been increasing their investments overseas in search of higher yields and anticipated capital gains, with Australia and the UK (more specifically, London) being popular destinations, according to the real estate firm.
In summary, DTZ noted that at the end of Q1, investor sentiment in Thailand was weak as the country was still locked in a political impasse. However, political uncertainty in the country has since eased in Q2 after the military took control, with consumer confidence rising in May for the first time in 14 months. The junta has made payments to the rice farmers and increased budget spending in a bid to boost expansion, with the Thai economy now expected to improve in H2.
This has helped turn investor sentiment in Thailand more positive, as evidenced by the surge in real estate investments this quarter. In addition, the consistent level of demand for office and retail space as well as rising rents has attracted the interest of both domestic and foreign investors, many of whom still see long-term opportunities in Thailand.
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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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If you have a news story or comment for publication about Thailand property or real estate email: andrew@propertyguru.com.sg