Thailand Real Estate Report Q3 2011
Includes 3 FREE quarterly updates
Since the military coup in 2006, the political situation in Thailand has been uncertain. There are worries that changes in leadership may complicate ongoing policies, leading to uncertainty for companies. Deputy Prime Minister Suthep Thaugsuban announced that elections will be held by June 2011. In the lead-up to the elections, we expect the incidence of protests to rise sharply, dampening investor sentiment. Massive political disruption is one possible outcome.
Despite political uncertainty, economic growth has been strong in Thailand in 2010. Real GDP growth reached 3.8% y-o-y in Q410, taking full-year 2010 growth to a 15-year high of 7.8%. Notably, inventory restocking made up the bulk of growth, contributing 3.2pp to headline growth, while private consumption made the second largest contribution at 2.6pp. For 2011, BMI holds a cautiously optimistic outlook for the Thai economy, but note that the high base effect from 2010 and the winding down of the inventory restocking cycle will mean that growth will moderate sharply. Currently, we project real GDP growth to slow to 3.6% in 2011 before accelerating to 4.0% in 2012.
For the time being, most protagonists in the country’s commercial real estate sector remain upbeat. In spite of early moves by the Bank of Thailand to restrict the availability of credit to buyers of condominiums, developers are looking to initiate over 200 projects across greater Bangkok in 2011-12. In the office sector, vacancy rates continue to run at early double-digit levels – although absorption in Q111 had picked up relative to the previous corresponding period. Large scale infrastructure projects (particularly in relation to transport infrastructure) are changing the economic geography of the country – and generally to the advantage of developers. Over the longer-term, the ASEAN Economic Community, which will allow for up to 70% foreign (ASEAN) participation in Thailand’s services industries, should also be helpful.
Still, the challenges remain substantial. The main ones can, perhaps, best be summarised as diminished competitiveness. In manufacturing, Thailand is losing ground to Vietnam and China. There are as yet few signs that government policies to promote the relocation to Bangkok of regional corporate headquarters is having an effect.
Since the military coup in 2006, the political situation in Thailand has been uncertain. There are worries that changes in leadership may complicate ongoing policies, leading to uncertainty for companies. Deputy Prime Minister Suthep Thaugsuban announced that elections will be held by June 2011. In the lead-up to the elections, we expect the incidence of protests to rise sharply, dampening investor sentiment. Massive political disruption is one possible outcome.
Despite political uncertainty, economic growth has been strong in Thailand in 2010. Real GDP growth reached 3.8% y-o-y in Q410, taking full-year 2010 growth to a 15-year high of 7.8%. Notably, inventory restocking made up the bulk of growth, contributing 3.2pp to headline growth, while private consumption made the second largest contribution at 2.6pp. For 2011, BMI holds a cautiously optimistic outlook for the Thai economy, but note that the high base effect from 2010 and the winding down of the inventory restocking cycle will mean that growth will moderate sharply. Currently, we project real GDP growth to slow to 3.6% in 2011 before accelerating to 4.0% in 2012.
For the time being, most protagonists in the country’s commercial real estate sector remain upbeat. In spite of early moves by the Bank of Thailand to restrict the availability of credit to buyers of condominiums, developers are looking to initiate over 200 projects across greater Bangkok in 2011-12. In the office sector, vacancy rates continue to run at early double-digit levels – although absorption in Q111 had picked up relative to the previous corresponding period. Large scale infrastructure projects (particularly in relation to transport infrastructure) are changing the economic geography of the country – and generally to the advantage of developers. Over the longer-term, the ASEAN Economic Community, which will allow for up to 70% foreign (ASEAN) participation in Thailand’s services industries, should also be helpful.
Still, the challenges remain substantial. The main ones can, perhaps, best be summarised as diminished competitiveness. In manufacturing, Thailand is losing ground to Vietnam and China. There are as yet few signs that government policies to promote the relocation to Bangkok of regional corporate headquarters is having an effect.
Contents
Executive SummarySWOT Analysis
Thailand Real Estate/Construction SWOT
Thailand Economic SWOT
Thailand Business Environment SWOT
Real Estate Market Overview
Key Issues
Table: Thailand’s Real Estate Market – Historic Rents, 2009 And 2010 (m2/month, US$)
Table: Thailand’s Real Estate Market – Net Yields, 2010-2011 (%)
Table: Thailand’s Real Estate Market – Terms Of Rental Contract/Lease, Mid-2010
Table: Thailand’s Real Estate Market – Available And Vacant Space, Mid-2010 (m2)
Real Estate Market Analysis
Industry Forecast Scenario
Real Estate Outlook
Table: Thailand’s Real Estate Market – Rentals, 2010-2012 (m²/month, US$)
Table: Thailand’s Real Estate Market – Forecast Net Yield, 2008-2015 (%)
Thailand’s Construction Industry Outlook
Table: Thailand Construction And Infrastructure Industry Data, 2007-2015
Table: Thailand Construction And Infrastructure Industry Data, 2012-2020
Macroeconomic Outlook
Table: Thailand - Economic Activity, 2008-2015
Business Environment
Real Estate/Construction Business Environment Ratings
Table: Asia Real Estate/Construction Business Environment Ratings
Thailand’s RECBER
Thailand’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Trade And Investment Ratings
Table: Thailand’s Top Export Destinations, 2001-2008 (US$mn)
Competitive Landscape
Company Profiles
Central Pattana (CPN)
Italian-Thai Development Public Company Limited (ITD)
Land And Houses
Raimon Land
Rasa Property Development
TCC Capital Land
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
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