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International Consultants: Industrial and Logistics Sectors Set to Shine in 2020

By on Jan 13, 2020 in Property News

No matter how the property market fared in 2019, factors such as political instability in certain major markets and, in particular, the US-China trade war are the major concerns of international property experts.

The retail market in Hong Kong, which has been rocked by pro-democracy protests for the past five months, saw the sharpest decline in rental rates in history, while China had a challenging year thanks to the lingering trade war. Over in the UK, the continuing Brexit saga is expected to hit occupational demand in the UK this year.

However, not all is gloom and doom. Cambodia has had a relatively good year and is expected to have a good 2020. In Singapore, the property market was largely stable and is expected to be more segmented within each real estate class in the new year. Australia, too, had a strong 2019 and economic growth in 2020 is anticipated to gradually accelerate.

Thailand
Aliwassa Pathnadabutr
Managing director, CBRE Thailand

It has been a very challenging year for the Bangkok real estate market — particularly the residential market, its largest sector in 2019. This sector has reached the slowdown phase of its market cycle. Growth has been further weakened by a slowing economy with a drop in exports as a result of the strong baht.

In addition, China’s economic growth is slowing and cooling measures — such as the loan-to-value regulations, which came into effect earlier this year — have dampened the market. The performance of major developers in 3Q2019 has dropped 20% to 35% on average. Although there has been talk of oversupply in the Bangkok condominium market, CBRE believes that it is only true in some locations. Many opportunities still exist on the fringes of Bangkok’s central business district (CBD).

In 2020, CBRE believes it will be the time for developers to clear unsold units in completed projects. The new projects will depend on having the right products in the right locations with the right prices. Also, the office and hotel sectors are poised to be the best performing property sectors. With limited new office supply and stable demand of 200,000 sq m per year, the Bangkok office market will likely maintain its strong momentum as we move towards 2021. CBRE also forecasts that new supply will gradually come online from 2022 onwards. Pressure will be on older office buildings, which will need to up their games to compete with the incoming new supply.

Good news can be found in the Thai tourism industry and hospitality sector. Thailand, especially Bangkok, has shown that it is a very resilient market, recovering quickly from any downturns in the market. The number of tourist arrivals continues to grow. The number of Chinese tourists, our largest market contributor, has rebounded with significant growth after a period of decline.

In addition, we have also seen a big increase in Indian tourist arrivals since late 2018. While there are a lot of new hotels being built in Bangkok, the promising increase in demand will keep the market afloat. Yet, the key challenge in Bangkok will be on increasing the room rates which are relatively low with small growth each year.

Moreover, in 2020, developers, especially in the residential sector, will have to adapt to a slower market that will continue to be dampened by various factors, including slow economic growth, the exchange rate, the uncertainty in the world economy as well as the Thai political climate. The industry itself will also be disrupted by changes in consumer behaviour and needs so it will depend on how the companies choose to react and adapt to new economic and market realities.

Read full article: https://www.theedgemarkets.com/article/international-consultants-industrial-and-logistics-sectors-set-shine-2020

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