Investors from Singapore, Hong Kong, the US and the Middle East have expressed a willingness to expand their investments in Thailand's property sector, particularly in office buildings, retail developments and serviced apartments, and strong growth is expected in these sectors next year.

Property agency Jones Lang LaSalle Thailand said that this year, foreign investors had bought Bt25 billion worth of office buildings in Bangkok, with most of that amount invested through property funds.

Managing director Suphin Mechu-chep said that after the coup, foreign investors were quick to understand what had happened in Thailand and maintained confidence in expanding their business here. Downward-trending interest rates and fuel prices boosted that sentiment.

She expects strong growth next year, especially in demand for office buildings.

Head of markets Caroline Murphy said there was a strong demand for office space in the central business district (CBD) and nearby areas close to mass-transit systems, because a number of foreign and domestic firms were expanding their business.

This applies especially to the areas of education, information technology, oil industry, banking, financial services and insurance.

Murphy said rental fees for office space in the CBD had increased about 5 per cent a year, while those in nearby locations but closer to mass-transit systems had increase by an average of 11 per cent a year.

At present, rental charges in the CBD average Bt700 per square metre per month, while nearby locations closer to mass-transit systems cost an average of Bt396 per square metre per month.

The CBD currently has 7.33 million square metres of office space, and this will increase by 307,300 square metres, because of developments due for completion next year.

Demand for new office space in the CBD equals about 260,000 square metres a year.

She said there was also strong demand for retail developments and serviced apartments, with rental fees generating returns on investment of 6 per cent and 8 per cent, respectively, on average.

These rates are higher than comparable returns generated on investments in Singapore and Hong Kong.

Jones Lang LaSalle said demand for residential condominium units in the CBD had shown strong growth that was expected to continue next year, especially for middle-market units priced from Bt2 million to Bt5 million.

There is also strong demand for condominiums outside the CBD but which are located near mass-transit systems and offer prices below Bt2 million per condo unit.

The property agency's research indicates 46 condominium projects with a total of 16,000 units are currently under construction in the capital and scheduled for completion between next year and 2009.

These will supply about 4,300 units per year to the market.

The projects reported have healthy sales averaging more than 70 per cent, said the agency.

Somluck Srimalee

The Nation