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Many sectors of the property industry improve in Q3 2009

By on Dec 28, 2009 in Research

Bangkok Overall MarketView Q3 09

The third quarter of 2009 saw improvements in many sectors of the property industry when compared to the first half of 2009. Every sector continues to encounter challenges. The hotel and industrial sectors continue to feel the full force of the global economic situation.

The luxury condominium market saw a significant improvement in the number of sales and we continue to see that the majority of purchasers were Thais who bought not only to be end users but also as buy to rent investors. In Q3 we have seen more project launches in downtown locations. The majority of these new projects have been from larger well capitalized companies, with smaller developers facing problems when trying to secure finance.

In Q3 the total supply of downtown condominiums reached 61,522 units which was an increase of 1,015 units which is up 1.7% Q-o-Q and 14.1% Y-o-Y.

The total supply of serviced apartments increased by 0.69% Q-o-Q and 6.84% Y-o-Y to 12,478 units in Q3 2009. Only two projects were opened in this quarter, the Sathorn Grace in the Silom/Sathorn district and the Rangratana in Central Lumpini.

Overall take-up of the Bangkok office market was 6,773,065 m2, up 0.1% Q-o-Q and 0.8% Y-o-Y. The occupancy rate of the Bangkok office market also improved slightly to 86.1% from 86% in the last quarter.

Overall, Bangkok office rents fell. During Q3 2009, Grade A CBD office rents fell for the fourth consecutive quarter to THB 694/m2 from THB 700/m2 in Q2 2009, down 0.9% Q-o-Q and 6.7% Y-o-Y.

The Energy complex with 119,000 m2 of office space is expected to be completed in Q4 of 2009. Including the Energy complex the total office supply in Bangkok is projected to grow by 226,464 m2 over the next two years.

In Q3 2009, the Bangkok retail occupancy rate increased slightly to 92.4% from 91.1% in the last quarter. Total retail space occupied increased to 4,863,419 m2, up slightly 2.2% Q-o-Q and 5.3% Y-o-Y. Suburban areas recorded the highest take up at 2,028,670 m2 which was up 2.7% Q-o-Q and 9.1% Y-o-Y. There are signs of improvement in the retail sector, however continued improvement will depend on the speed of the global and local economic recovery coupled with a stabilized political environment.

The industrial sector has seen limited new sales of serviced industrial land plots with only 236 Rai sold in quarter 3 and a total of 580 Rai for the first three quarters of 2009 compared to sales of 4,170 Rai for the whole of 2008. We have not however seen a large number of industrial properties being offered for sale due to factory closures. The total value of BOI-approved projects decreased by 34.5% Y-o-Y , to THB 176 billion from THB 268.8 billion, for the first nine months of the year.

Foreign Direct Investment (FDI) into the industrial sector dropped 21.9% Y-o-Y in 8M2009, while foreign direct investment from Japan, Thailand’s major foreign investor, has decreased by 12.5% Y-o-Y.

The hotel sector continues to suffer from a reduction in tourism levels, however occupancy rates for luxury and first class hotels saw a slight improvement rising 1% to 45% in Q3. When looking at the figures on a Y-o-Y basis we see that occupancy has dropped 25.2%

Average Daily Room Rates (ADR) increased at upscale hotels from THB 5,308 in Q2 to 5,322 in Q3 an increase of 0.3% Q-o-Q but down 7.2% Y-o-Y THB 5,737 in Q3 2008. RevPar was at a rate of THB 2,365 in Q3 up from THB 2,277 in Q2, an increase of 3.9% Y-o-Y figures were less positive recording a decline of 35.6%.

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