Fierce competition ahead as office oversupply drags Thai CRE in 2025–26
SCB EIC warns office rentals will remain oversupplied with sluggish demand recovery, while retail expands only modestly in 2025–26.
- Thailand's commercial real estate market, particularly the office segment, is projected to face a significant oversupply in 2025-2026.
- New office supply is expected to grow by 2.5%-4.5% annually, far outpacing the sluggish demand growth of only 1% or less.
- This imbalance is driven by weak economic growth, the persistence of hybrid work models, and declining employment, which will likely lower office occupancy rates from 81% in 2024.
- The oversupply will lead to fierce competition, forcing developers to adapt by differentiating projects, improving efficiency, and focusing on sustainability to attract tenants.
The SCB Economic Intelligence Center (EIC) has released its outlook for Thailand’s commercial real estate sector for the second half of 2025 through 2026, warning that the market remains heavily pressured by oversupply, particularly in the office rental segment.
According to the report, demand for office space is expected to grow only 1% year-on-year in 2025, similar to last year, and remain flat into 2026. Key factors behind the sluggish outlook include Thailand’s weak economic growth, incomplete recovery of investor confidence, fewer new company registrations, declining employment, and global uncertainties stemming from trade tensions.
Although foreign direct investment has provided some support, reflected in high Board of Investment (BOI) applications during the first half of 2025, demand growth remains limited. The continuation of hybrid work practices since the Covid-19 pandemic has also reduced the need for physical office space.
At the same time, new supply continues to enter the market from projects under construction. Between 2025 and 2026, office stock is expected to expand by 2.5%–4.5% per year, outpacing demand. This will likely push occupancy rates down from 81% in 2024, particularly in Grade A and A+ segments. Rental growth will remain constrained given the weakness in demand.
For the retail rental market, SCB EIC projects only modest growth of 1%–2% year-on-year in 2025–2026. Domestic purchasing power remains fragile due to high household debt and sluggish economic growth, while slower tourist arrivals – particularly from China – have reduced overall mall and retail traffic.
Even so, major developers continue to attract strong visitor flows through location diversification, renovation projects, and a wider tenant mix. New retail supply is forecast to expand by 3%–4% annually, which may lower occupancy from 95% in 2024, though rates are expected to remain above 90%. Rental growth will be limited, rising only 1%–2% per year.
Fierce competition drives urgent need for adaptation
SCB EIC noted that competition in the commercial real estate (CRE) market is set to intensify, with large players gaining an edge through stronger capital and brand power. Mid-sized and smaller developers, meanwhile, will need to adjust strategies to survive.
Key approaches include:
- Developing new projects cautiously.
- Differentiating and upgrading project quality, such as diversifying tenant mix and offering value-added services.
- Enhancing cost efficiency across both development and operations.
- Prioritising ESG principles, particularly through environmentally certified and sustainable projects.
Overall, SCB EIC stressed that Thailand’s commercial real estate outlook for 2025–2026 remains under heavy pressure. Office rentals continue to face oversupply and slow demand recovery, while retail properties can still expand modestly but lack strong momentum. Developers at all levels must strategically adapt, focusing on quality, differentiation, and sustainability to remain competitive in an increasingly challenging market.
