CBRE: 2021 Thailand Real Estate Market Outlook
RESIDENTIALThere is still demand in the market but with lower budget. Developers will be focusing on developing smaller-scale condominium developments with a low number of units to reduce investment size and could better fit in a sub-location off a main street. Not only will these new projects be competing in price but also in offering the right design and facilities that suit its market segment as well. Luxury residential market is still in high demand. This target segment has high purchasing power but will be selective on the products they buy.
Employee-centric will be key as businesses must stay agile and align their business growth with the interests and expectations of employees and their preferred ways of working. As supply increases and occupancy rate drops, the market will change to a tenant’s market where tenants, especially large tenants who occupy large office space, have greater negotiation power for better terms and flexibility from the landlords.
Landlords will be reassessing their trade and tenant mix allocation over the long run. In terms of retailers, resizing and reformatting rental space will become a more and more important approach as it could help them be more cost-effective and more agile at the same time. We may see retailers closing down branches that do not generate profit to decrease operating costs. Differentiation and experience-generating content will continue to be essential in attracting tenants, offering services or experience that customers could not get from online shopping.
2021 may continue to be a challenging and exhausting year for the hospitality sector as most owners and operators have been operating under COVID-19 precautions with limited revenue for over a year. It will be an inward-looking year where domestic demand is the sole source of revenue. Everything needs to be revamped, from hotel operation to marketing campaigns, for survival.
The improving convenience and penetration of online shopping have driven and will continue to drive the demand for Modern Logistics Property (MLP) in Thailand. There has been a shift in demand as investors have been increasingly more interested in buying factories rather than renting them to have more control over their premises. The ongoing travel restrictions have affected the inspections of contract signings for SILP, reflected in the declining number of new land sold as developers have claimed that the 14-day quarantine policy is disincentivizing investors to travel to Thailand to close deals.
Landlords will need to take a proactive approach in a more dynamic market to generate positive performance for their assets. Overall land prices in prime locations will remain relatively flat or even decrease due to the economic slowdown with no new record-breaking deals. There is still demand for prime freehold and leasehold sites in Bangkok while developers are taking a step back to reassess the level of supply and demand in the market.