Room for optimism in real estate
published : 24 Oct 2019 at 09:31
newspaper section: Business
Thailand's property market still has room for optimism on investment and business opportunities, despite a slowdown in economic growth, US-China trade tensions, a strong baht and slumping exports, says the consulting firm Edmund Tie.
Total investment in the third quarter of 2019 increased only marginally by 1.1%, from 12 billion baht in the second quarter to 12.1 billion.
The completion of several office buildings in the central business district (CBD) and non-CBD areas contributed to a slight increase in Bangkok's total supply by 0.8% from the previous quarter.
As of September, the total supply was 8.68 million square metres. The stock of office supply in the CBD was 4.68 million sq m, increasing by 1% from 4.63 million sq m in the second quarter. Office supply in CBD accounted for 53.9% of total office supply in Bangkok.
Supply of prime office buildings in CBD increased from 1.45 million sq m in the second quarter to 1.49 million in the third quarter, posting quarter-on-quarter growth of 3.3%.
The uptick was in part thanks to the completion of Mitrtown Office Tower, with a net lettable area of 48,000 sq m.
Total supply of secondary office spaces in CBD remained unchanged at 3.18 million sq m in the third quarter from the previous quarter as no new supply was completed.
The asking rent for prime offices in the CBD area averaged 1,075 baht per sq m per month in the third quarter, a slight increase of 0.5% from the second quarter.
The occupancy rate of prime office spaces in CBD increased slightly from 93.3% in the second quarter to 93.8% in the third quarter.
The stock of retail supply in the downtown area was 1,461,241 sq m in the third quarter, increasing from 1,425,241 sq m in the second quarter by 2.5%.
The average occupancy rate of retail spaces in the downtown area increased to 95.5%, up from 95.0% in the second quarter. The increase in occupancy rate in downtown was attributed to the completion of Samyan Mitrtown.
The average retail rent in downtown was 2,600 baht per sq m per month, recording a small quarter-on-quarter increase of 0.39% over the second quarter, which was 2,590 baht per sq m per month.
The gross rental index for retail spaces in downtown increased from 113 in the second quarter to 114 in the third quarter. In midtown, there was no change in gross rental index (103).
The average occupancy in the final quarter of 2019 is anticipated to improve as newly completed malls are well-received by tenants.
The government's economic stimulus package is expected to boost consumer confidence, which could then have a positive impact on retail sales and private spending.
Edmund Tie Thailand said new retail projects due for completion in the fourth quarter have drawn interest from anchors and tenants. They enjoy high take-up rates even before completion.
- second quarter
- sq m
- third quarter