There has been some serious expansion in Bangkok’s commercial property sector during the past few years, however, significant transactions of income-producing assets in this segment have been unheard of. In fact, there has not been not a single Grade-A office building sold over the past decade, CBRE notes.
Even with overseas interest in Thai property on the rise, CBRE Senior Manager, Research and Consulting Chris Hobden explains to the Bangkok Post that the combination of barriers to foreign ownership, prominence of domestic property groups and absence of income-producing assets offered for sale has seen Thailand trail behind its regional peers when it comes to transactions of income-producing properties.
Hobden says there was only a single THB 1 billion arm’s-length commercial property sale over the past two years. This was the sale of Sun Towers, a grade-B non-CBD building, which was sold for THB 4.5 billion in 2015.
One issue preventing more transactions from taking place is the fact that foreign ownership of land is prohibited in Thailand. Hobden points out that foreign nationals are able to purchase strata-title units within co-owned buildings through freehold tenure, provided the total number of foreign-owned units does not exceed 49 per cent per building. On the other hand, investors have had to find other ways to own buildings in the country.
“The route for prominent foreign entities to enter the Thai market has been through joint ventures with local partners,” Hobden tells the newspaper. “Although the latter has resulted in a series of high-profile partnerships, most notably within the residential sector, China Resources’ collaboration with M. Thai, to develop All Seasons Place in 1989, is the only example of a domestic-foreign partnership put in place undertake a predominantly office scheme.”
This trend could be changing with the Bangkok office market predicted to perform well in the next two years. There is appetite among domestic groups to build on considerable land holdings currently earmarked for office development and joint ventures with foreign partners could be on the rise.
