It is that time of year again, where Bangkok residents have to endure PM2.5 pollution, which also limits visibility and obscures the skyline. The same can be said for the Bangkok property market outlook -- hazy and uncertain.
The impact is a carryover from last year. Like a bad hangover, we don't know exactly which medicine will work best to make things better, and it may just be we have to wait for improvement.
As the Bank of Thailand has noted, Thai economic growth in 2020 is expected to be even slower than in 2019; most forecasters expect GDP growth this year to be lower than 3%.
The central bank also said its tougher loan-to-value (LTV) regulations for mortgage lending will be reassessed to be more in line with what the market needs.
The continued strength of the baht, which briefly appreciated past 30 per dollar during the New Year period, is likely to continue to dampen foreign investment in Thailand as well.
The Bangkok condominium market will continue to slow down this year because of a weak economy, the property market cycle, a drop in foreign sales and government measures. However, CBRE believes there is still life in the market.
"Developers need to look for gaps in the residential market," said Charnwit Pasuwat, director and head of design development with CBRE Thailand.
"Avoid oversupplied locations and develop sites in locations with good accessibility and attractive characteristics. Buyers will be more cautious where they put their money.
"It will be a tough year for residential developers, but it provides them with a good opportunity to slow down and focus on value improvement rather than volume."
The office market will see more flexible leases being offered to compete with the growing co-working space industry. Co-working space will see a significant change this year as big players slow their expansion, while new players such as Common Ground expand more into retail spaces, capitalising on its partnership with the retail developer Central Pattana Plc.
Disruption in the retail market from online platforms remains the biggest challenge this year, coupled with the incoming supply of over 110,000 square metres of retail space.
The consumer confidence index, a key indicator for the retail industry, has reached its lowest point since the 2014 political unrest, at 69.1 in November 2019, dropping from 80.7 in January 2019.
A clearer future can be seen in the tourism and industrial markets. Chinese tourist arrivals have recovered with double-digit increases in recent months, while the growth of e-commerce is driving demand for logistics properties and warehouses in the industrial property sector.
Overall, Bangkok is facing problems for which putting on a mask will no longer suffice.
Long-term solutions are needed to help people breathe better air and clear the cloudy property outlook.
Rathawat Kuvijitrsuwan is Head of Research and Consulting, CBRE Thailand. He can be reached at bangkok@cbre.co.th