Thailand Real Estate Report Q2 2012

The effect of the floods that wracked Thailand at the end of 2012 will be long-lasting and are likely to continue to have an effect on the real estate market throughout 2012. Some major industrial players whose plants were shut down have recently announced major investment plans for the development of new premises. However, potential investors are concerned about Thailand’s flood-prevention measures and how the government can ensure a similar occurrence in the future will not have such a dramatic effect on their properties.

Following our most recent in-country interviews in December 2011, our overall predictions for rents in Bangkok, Rayong and Pattaya-Chonburi are optimistic. We have estimated a slight dip between early and late 2011 in some cases, but the general picture has been for steady increases, which we expect to continue throughout 2012.

Following the July 2011 election of Yingluck Shinawatra and her August 2011 inauguration as prime minister, it is hoped that political stability will return, which could benefit a number of real estate developers with ties to the government. However, BMI downgraded its real GDP estimate for 2011 to 1.5% from 3.6% in light of the economic damage brought on by the flooding late in the year. We are expecting a rebound in economic activity in H112, and as such our forecast for the year remains unchanged at 4.0%.

Key Opportunities In The Real Estate Market

Pattaya is proving to be an increasingly popular destination for overseas investors and local developers. The beach holiday destination’s proximity to Bangkok and value for money are maintaining strong demand for holiday properties and new projects in the area.

The new Pheu Thai government is hoped to improve long-term investor sentiment, as the political instability of the past few years dies down.

A number of major industrial companies (like carmaker Toyota Motor) are investing great sums in the development of new manufacturing premises. Over the long term this could increase the quality of overall industrial space in the country.

Key Risks To The Current Real Estate Market

Industrialists are voicing concerns that flood-prevention measures are not yet concrete enough to prevent further damage to property, which may dent investor sentiment over the coming months.

Demand for office space in Bangkok appears to have remained stagnant over 2011. No project completions are expected in 2012.

The improved political situation follows years of unrest, which may not completely disappear for a months or years.