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The Events in BKK in May 2010 Have Raised Concerns

By on Jun 21, 2010 in Research

The events in Bangkok in May 2010 have raised concerns about the recovery we were seeing in many sectors of the Thai property market in the first quarter of 2010.

However, it will take months to see what the effect will be on sales and letting volumes, prices and rents. We do not believe there will be a sudden a dramatic downward movement in prices or rents.

The total supply of expatriate standard apartments in downtown Bangkok increased 2.3% year on year. Occupancy was 88.2%. Rents rose in some locations such as Central Lumpini but fell in other locations.

Despite the increase in the Bangkok hotel supply, Bangkok occupancy rates and REVPAR increased but the Average daily rate decreased in quarter 1.

International Tourist Arrivals increased by 27.1% on Q1 2010. Obviously Q2 numbers will be very poor and it remains to be seen how long it will take for business and tourist arrivals to recover.

The majority of new condominium launches in the first quarter were mainly small one bedroom units.

The office market remained weak. There was no increase in supply. Take up grew by 17,481 square metres. Grade A CBD rents fell by 3.8% year on year.

Retail Occupancy increased to 93.4%. Rents remained at similar levels. A number of shopping centres were closed in Central Bangkok for much of April and May.

882 Rai (349 acres) of SILPs were sold on industrial parks and estates in Q1 2010. This was an increase 891% y-o-y.

There was 175% increase in townhouse completions on quarter on quarter but developer built single detatched house completions fell by 74% quarter on quarter.

Housing

In Q1 2010 we saw a decrease of 20.5% Y-o-Y in SDH land allocation permits from the Land Department a drop from 760 to 604 for the Bangkok Metropolitan Region. In Bangkok the majority of land allocation permits were located in the northern and eastern zones due to the completion of the Airport Rail Link (ALR) which is scheduled to be fully operational by July 2010. In Q1 2010 there were 26 projects in Bangkok Metropolitan Area (BMR) that received land allocation permits.

23 % of the construction of the SRT Light Red Line (Bangsue – Taling Chan) has been completed. Furthermore, there has also been visible progress on the MRT Purple Line (Bangyai – Bangsue) progressive. This will increase the demand for the projects around western area but the main impact will be on completion of these lines.

Overall sales performance of TH projects also improved. All segments for townhouses and SDH have sold over half of their units, while most of newly launched projects have an average of 20%-40% sold of total units.

This is an extract from Bangkok Overall MarketView Q1 2010, click to download the full report.

Toby has been living in Bangkok for a number of years and has a strong research background. With his years in Thailand Toby brings a wide range of property knowledge to his research writing

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