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Outlook As Hazy As The Sky

January 15, 2020
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It is that time of the year again, where Bangkokians are faced with PM2.5 problem, limiting the visibility of Bangkok’s skyline. The same can be said for the Bangkok property-market outlook this year―hazy and uncertain.

The impact is a carryover from last year, like a bad hangover where we don’t know exactly which medicine will work best to make things better, and it may just be that we have to wait for improvement.

As stated by the Bank of Thailand, the Thai economy in 2020 is expected to be slower than the previous year and most financial institutes have forecasted the GDP growth this year to be lower than 3%.

The Bank of Thailand has also said that loan-to-value (LTV) regulation will be reassessed to be more inline with what the market needs.

The continued strength of the Thai baht, which dropped below 30 baht per dollar during the New Year period, is likely to continue to dampen foreign investment into Thailand.

The Bangkok condominium market will continue to slow down this year due to a weak economy, property market cycle, a drop in foreign sales and government measures. However, CBRE believes that there is still life in the market.

“Developers need to look for gaps in the residential market. Avoid oversupplied locations and develop sites in locations with good accessibility and attractive characteristics. Buyers will be more cautious where they put their money. It will be a tough year for residential developers, but it provides them with good opportunity to slow down and focus on value improvement rather than volume,” said Mr. Charnwit Pasuwat, Director, Head of Design Development, CBRE Thailand.

The office market will see more flexible leases being offered to compete with the growing co-working-space industry. Co-working space will see a significant change this year as big players slow down their expansion, while new players like Common Ground expand more into retail spaces, capitalizing on its partnership with CPN.

Disruption in the retail market from online platforms remains the biggest challenge this year, coupling with the incoming supply of over 110,000 square metres of retail space.

Consumer confidence index, another key indicator of retail industry, has reached the lowest point since the 2014 political unrest, at 69.1 in November 2019, dropping from 80.7 in January 2019.

A clearer future can be seen in the tourism and industrial market. Chinese tourist arrivals have recovered since the end of 2019 with double-digit increases, while the growth of e-commerce drives demand for logistics properties and warehouses in the industrial property sector.

Bangkok is facing problems that putting on a mask will no longer suffice.

Long-term solutions are needed to help Bangkokians breath better air and clear this cloudy property outlook.

An article written by Rathawat Kuvijitrsuwan, Head of Research and Consulting, CBRE Thailand for Bangkok Post dated 15 January 2020.

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