Real estate investment in Thailand surged 81.8% to US$2 billion last year from $1.1 billion in 2011 as overall investment picked up on the back of strong property fund activity.
As in neighbouring countries, Thailand's investment activity was boosted by the listing of major property funds and active acquisitions, particularly in the hotel and office sectors, said the California-based property consultant DTZ, a unit of Australia's UGL Ltd.
Transactions by listed property funds or public funds for public offering (PFPOs) totalled $1.1 billion last year, representing 55% of total investment in Thailand.
The country's investment activity was amplified by the listing of the Tesco Lotus Retail Growth Freehold and Leasehold (TLGF) in the first quarter of 2012, which was also the year's largest property fund listing.
The $594-million fund acquired 17 Tesco Lotus hypermarket-anchored shopping malls in prime locations in all regions of Thailand.
This transaction alone was already more than half Thailand's investment value the previous year.
Other major deals in 2012 were undertaken by listed property funds, formally known as PFPOs or Type 1 property funds.
Notable property fund investments last year included the acquisition of three serviced apartments and residences for $106 million by the listed Land and Houses Freehold and Leasehold Property Fund (LHPF) in the first quarter.
The Quality Houses Hotel and Residence Freehold and Leasehold Property Fund (QHHR) similarly acquired three Centre Point serviced residences for $107 million in the third quarter.
Low Ming Tze, associate director of consulting and research, said real estate investment trusts (REITs) were net buyers of real estate in Southeast Asia last year, accounting for $5.5 billion or about 20% of investment, and 2013 will be no exception.
"In Thailand, the recent enactment of the new REIT framework on Jan 1, 2013 will no doubt inspire real estate players to inject their assets into REITs as an alternative means to raise capital," she said.
Nevertheless, during the interim one-year grace period before REITs fully replace PFPOs next year, many developers will continue to establish PFPOs.
Real estate investment activity in Southeast Asia last year reached $26.7 billion, slightly more than the $25.6 billion recorded in 2011.
However, in the office sectors in Singapore, Malaysia and Thailand, activity fell by 32% to $4.1 billion and accounted for 15.5% of total investment activity.
Southeast Asian activity in 2012 continued to be led by residential investment, which accounted for almost a third or $8.5 billion, while hotel investment doubled.
Office investment in Thailand has been fairly flat in recent years, constrained by the lack of product offerings on the market and a mismatch in pricing expectations between buyers and sellers.
Notable office deals last year included The Offices at CentralWorld in Bangkok for $161 million and Mercury Tower for $38.8 million.
In the residential sector, the sale of land for development has been extremely active as developers continue to acquire land banks to take advantage of the extension of mass transit lines.
Other than the hotel and serviced apartment transactions mentioned above, demand by foreign investors for hotels in resort destinations such as Phuket and Koh Samui remain strong.