Centre of Attention
As regional integration looms, Thailand’s property market is well placed to reap the benefits
Thailand’s logistics, office, retail and serviced apartment sectors can expect a short-term boost from the Asean Economic Community (AEC) as overseas investors turn to countries where opportunities are stronger.
Aliwassa Pathnadabutr, managing director of property consultant CBRE Thailand, says Southeast Asia features emerging and developing markets with high growth potential.
“Thailand will no longer be seen as just a country but as the centre of the inland AEC, surrounded by emerging markets,” she says. “The bigger the market, the more investors around the world will come.”
Border trade will gain directly from regional integration, and Thailand will become a logistics hub on the strength of infrastructure such as roads, ports and mass transit.
Despite prospective growth in the industrial sector, Thailand’s special economic zones are not ready. The country lacks airports and other facilities to support the planned SEZs.
Nonetheless, investors worldwide will see the region’s potential as a production base. Pioneering investment will take place in industry and logistics. Investors will also look for office space to use as a regional headquarters.
When office demand arises, temporary residence will follow, spurring rentals at hotels, serviced apartments and condos and eventually benefiting the permanent residential sector.
“Thai retailers will have a great chance to expand their brand in neighbouring countries where the middle class and a young population are increasing, like Vietnam and Cambodia,” Ms Aliwassa says.
Phanom Kanjanathiemthao, managing director of property consultant Knight Frank Chartered (Thailand), specifies four property sectors in Thailand set to benefit from regional industry growth: offices, hospitals, hotels and retail. In particular, office rent in Bangkok is much lower than in Singapore.
“Greater impact will be seen from Myanmar than from Cambodia and Laos, as Myanmar has many development plans for the industrial sector,” he says. “Its population is also large.”
To handle a windfall from Myanmar, the Thai government must improve the transport network in two loops: feeders from Bangkok and other destinations (high-speed rail) and local transport within destinations.
Surachet Kongcheep, associate director at property consultant Colliers International Thailand, says the AEC will boost foreign direct investment in Thailand.
Many foreign investors are looking for a manufacturing base with good facilities and logistics. This is especially true for investors or companies seeking privileges from the Asean community when exporting to other Southeast Asian countries.
The Industrial Estate Authority of Thailand plans to develop industrial estates in the border provinces, especially Kanchanaburi and Chiang Rai.
Eight new industrial estates will rise along the East-West Economic Corridor, while the Board of Investment will revise privileges to prepare for the AEC and enhance Thailand’s competitiveness.
“Other countries in Asean have also launched investment privilege strategies to attract foreign investors,” Mr Surachet says. “However, some investors are concerned about the new industrial cluster scheme, as some locations in Thailand still lack supportive facilities and infrastructure. The government should develop and improve these.”
Nalinrat Chareonsuphong, managing director of property consultant Nexus Property Marketing, envisions a positive impact on the Thai property market as the number of expatriates and foreign investors grows.
The influx will create demand in various sectors such as industrial estates, offices, hotels, serviced apartments and condos as newcomers take advantage of Thailand’s comparatively low rents.
Suriya Poolvoralaks, managing director of SET-listed developer Major Development Plc, says the growing economies of neighbouring countries have generated a class of nouveau riche with an eye towards a luxury condo in Bangkok.
“We have a larger number of buyers from neighbouring countries like Myanmar and Laos,” he says. “Some are business owners looking for an investment in Thailand.”
The trend is also seen at high-end condo projects by Magnolia Quality Development Corporation (MQDC), a property arm of the Chearavanont family.
“A few years ago our customers were only from Hong Kong and Singapore,” says MQDC managing director Thanawan Chaiwatana. “Now we see rising numbers of buyers from Malaysia and Myanmar looking for and acquiring a unit.”
Source: Bangkok Post – 29 October 2015