Published on 23 January 2006 at 04:30 pm
Filed in Property News for Thailand » Positive Prospects for Investment Property in Thailand
Despite a number of negative factors that may slow down the Thai economy this year, the 2006 prospects for the investment property market in Thailand are positive according to leading industry experts.
Both Jones Lang LaSalle, the world’s leading real estate services firm, and local Thailand based M.K. Real Estate Development Public Company Limited agree that unprecedented levels of government investment into infrastructure projects in Thailand will open up more areas of this already incredibly popular country to real estate investment, and that all sectors of the Thai property market will continue to grow by up to 15% this year.
The mega investment that has been allocated by the government of Thailand for a series of mass transit, road network and general infrastructure projects will see more areas of the country becoming more accessible; and areas where it was previously desirable but not possible to construct will also become accessible. Developer interest is already heightened, and therefore over the next three years as the infrastructure projects are rolled out and completed a building boom has been predicted.
Thai construction costs have been rising quite sharply in recent years; this has artificially restricted the new build market in Thailand and led to a supply deficit. The spiralling costs are believed to have now stabilised and a spokesperson for Jones Lang LaSalle added that “we believe that developers of new projects will try to find ways to reduce cost without significantly impacting the finished product.” It is in their best interests to do so, because the demand for investment property across the four main real estate sectors in Thailand is still increasing and developers have a great opportunity to get in on the demand for new commercial and residential real estate.
The four main investment property sectors in Thailand are retail, office, serviced property and condominiums, and the 2006 prospects for each sector are positive: -
The retail real estate market in Thailand is currently the number one property sector; rental rate increases have been possible for owners of retail real estate for the last eight years in a row. Bangkok is the centre for this particular market sector, and in 2006 a number of prime new development projects are due for completion in the city. While this will of course increase supply, the new developments are first class and located in the best areas and therefore able to command increasing rental charges
The office sector of the commercial property market in Thailand is also extremely in demand from investors and consumers alike; while there appears at first glance to be an oversupply of office space, it is the prime A grade office space that it most in demand and least in supply - therefore the rate rises have been impressive over the past few years to date and are likely to continue rising in 2006.
The serviced property market - in particular the serviced apartment sector of Thailand’s property market - has average occupancy levels and annual rental rate increases at the moment, but the demand for A grade apartment accommodation is set to increase sharply with the predicted rise in the number of expatriates relocating to Bangkok to work throughout 2006 and beyond. The number of work permits granted to overseas workers is at an all time high and this fact alone should bode well for this particular market sector. Property developers in Thailand agree, and licenses have now been granted for the building of 1,600 new serviced apartments.
And finally, the condominium sector of the investment property market in Thailand is also looking good for 2006. While supply is good, it is not excessive - and the most attractive properties in the best areas of Thailand are still highly in demand. This particular market has enjoyed record price increases over the past couple of years and while the rate of increase is set to stabilise in 2006, property prices are still expected to increase as local and international demand remains constant for these types of property.
Overall, international interest in investment property in Thailand has consistently risen annually in line with tourism numbers, and the country remains one of the most exciting of the Asian markets for investors across all real estate market sectors. The 2006 prospects for investment property in Thailand are positive and anyone contemplating making a move should consider making it before they are priced out of the market!
