Although Thailand's economic growth softened throughout 2013, the Bangkok property market made it through the year relatively unscathed, according to Jones Lang LaSalle, a professional services firm specialising in real estate.
However, continued uncertainty over the Kingdom’s political situation and the downward revision of forecasts for the country’s economic growth this year make it hard to predict where the market is heading in 2014, the company said.
Managing director Suphin Mechuchep said the Bangkok property market had finished strongly last year, despite unfavourable conditions throughout much of the year. Demand across property sectors was robust, as reflected by both steady growth in selling prices and rents, as well as the successful introduction of new supply.
In the condominium sector, most of the new projects launched were well received by buyers, with those located near existing and under-construction mass-transit stations achieving the highest pre-sales rates.
Average selling prices continued to grow, though the growth rate was less than in 2012 due to stiff competition as a good amount of supply remains available in the market.
Bangkok’s commercial-property sectors performed well throughout last year as limited supply and strong demand drove occupancy rates and rents to all-time highs in the office sector, while the prime retail market is experiencing near-record high occupancy and rent levels, according to the company.
Across Bangkok, office occupancy has reached 90 per cent, while rents have been increasing for nine consecutive quarters. In the prime retail market, occupancy is above 94 per cent, while rents have been rising for 13 consecutive quarters, due largely to limited supply and strong demand from both local and international retailers.
“Strong fundamentals helped save the Bangkok property market in 2013. But at this point, it remains hard to predict where the market is heading in 2014. The major concern for most parties is the current political turmoil.
“We have already seen property developers, owners, investors and occupiers becoming more cautious, with some of them adopting a wait-and-see approach. The fact that some property developers and owners have become reluctant to invest in marketing and promotional campaigns exemplifies this trend,” she said.
Though experience from previous bouts of political unrest that Thailand has faced over the last decade suggests that short-term impacts from individual incidents of unrest on the property market have been limited, there has been longer-term uncertainty created by these events, as evidenced by the fact that growth in Thailand’s foreign direct investment has not kept pace with its Asean neighbours in recent years, Suphin said.
“With all eyes on elections scheduled for February 2, the most important factor in the outlook for 2014 is how quickly and smoothly the current political situation is resolved,” she added.