CBRE Research expects 2016 to be a better year for Thailand. The key themes going forward for the real estate market will be e-commerce, growth in tourism, and a continued rise in prime asset prices.
E-commerce: Recently, CBRE Research has seen a shift in consumer patterns as e-commerce began to find a foothold in Thailand. The increase in online shopping has pushed retail developers of existing and planned shopping malls to offer a variety of new experiences for customers, giving them a reason to visit the physical centre. The shift to e-commerce presents an opportunity for the office and logistics market. The growing demand for office space from the e-commerce sector has compensated for weaker demand from other sectors. With limited future office supply and growing demand, CBRE Research believes that the vacancy rate will remain below 10% and rents will continue to gradually increase. The growth of e-commerce has also led to higher demand for Modern Logistics Properties (MLP). Leading e-commerce firms such as Lazada and multi-channel retailers such as the Central Group acquired new warehouses in 2015.
Growth in Tourism: In 2015, Thailand saw record tourist arrivals of just under 30 million driven by the growth of Chinese tourists who now comprise 26% of total tourist arrivals. With rising tourist arrivals, the average occupancy rate at Bangkok downtown hotels has steadily risen to almost 75%. However, the room rate has remained relatively flat.
Rising Asset Prices in Prime Downtown Locations: CBRE Research anticipates that the prices of newly launched condominiums located in the best downtown locations will continue to rise. Buyers will continue to be willing to pay a large premium for the right product in the right location in 2016. CBRE Research believes that prime land prices in Bangkok will continue to increase as developers continue to compete to acquire sites. We are confident that the land price record will be broken as early as the first half of 2016.
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