Warehouses to stay in demand
Warehouses and logistics centres are predicted to be property stars in 2022 thanks to e-commerce demand, while commercial properties will continue to be challenged by the pandemic.
Phattarachai Taweewong, director of research and communication at property consultancy Colliers International Thailand, said demand for warehouses, particularly high-quality facilities, has been on the rise since 2020.
"The pandemic keeps boosting online shopping," he said. "Logistics centres and factories of e-commerce business and consumer product entrepreneurs have been expanding since 2020 due to high demand."
In the first half of 2021, new lease contracts of warehouses, logistics centres and factories totalled more than 150,000 square metres.
Large players got a good rental rate on new spaces despite the pandemic.
In 2022, warehouses and factories are projected to grow steadily, particularly built-to-suit facilities and warehouse farms, as foreign investors are interested in investing in various industries in Thailand.
"High demand for warehouses and factories is thanks to the export sector, comprising the food processing business, medical equipment, medical supplies and the packaging design and manufacturing business," said Mr Phattarachai.
He said 2022 will be another challenging year for commercial properties, including offices, retailers and hotels, due to the ongoing pandemic.
The office market will see a large amount of new supply being completed in 2022-23, totalling nearly 1 million sq m.
Many office landlords are worried that newly completed supply may not be absorbed as fast as expected.
As of the end of 2021, total office space in Bangkok rose 2.6% year-on-year to 9.314 million sq m, while the occupancy rate dropped slightly to 93.8% as new supply had a lower rental rate than targeted.
Key drivers of office demand last year were from e-commerce businesses, financial institutions and co-working space operators.
"Some tenants wanted to renew a contract but asked for small spaces," he said. "Big tenants that use large spaces bargained for better conditions from landlords."
Mr Phattarachai said the hotel sector in 2022 will continue to struggle amid the effects of the new variant Omicron. If the government can control the pandemic, hotel business will resume.
"If the [Covid-19] situation gets worse, we will see more hotels being offered for sale, as well as acquisitions by large investors," he said.
For retail property in 2022, new large projects will be completed in Greater Bangkok, particularly inner-city locations and next to the Chao Phraya River, mostly by large developers.
"Large retail developers are still seeking opportunities to develop and expand their projects in inner-city areas and on the outskirts," Mr Phattarachai said. "Large players like international brands will keep requiring more rental spaces."
Demand for retail space also came from restaurants and the fashion industry. As a result, vacant spaces have been quickly replaced by new tenants, despite the pandemic.
The country's reopening in November might revive the retail property market this year, but the pandemic remains a key factor for the retail sector.
"Large retail developers will take this time to renovate to meet changing consumer behaviour," Mr Phattarachai said.
At the end of 2021, accumulative retail space in Bangkok and surrounding locations totalled 9.121 million sq m, up 2% from 2020. There was 174,124 sq m under construction which would be completed in 2022, and 147,308 sq m by 2023.