Transit extensions, AEC likely to boost property rental market, seminar hears

Speaking at the seminar, Dr Piyasak Manason, the bank’s senior vice president and head of its industrial and economic research department, said the transit extensions were positive to the apartment market for white-collar workers. Meanwhile the Asean Economic Community was also providing a boost to the apartment market for foreign businesspeople.
However, if considered by segment, the outlook of the hotel market is strongest thanks to tourism, both inbound and local. The bank estimates the number of inbound tourists this year to reach 32 million, 34 million next year, and 36 million in 2018.
Medium-sized and budget hotels are expected to benefit largely from Asian and local tourists, he said.
In the apartment sector, the market for serviced units for expatriates is well placed to grow, especially the Grade B segment, in line with the mass-transit extensions. The transit extensions are also widening the central business districts, enhancing the market for white-collar serviced apartments.
As for apartments for labourers in the manufacturing sector, they might face challenges from the changes in the country’s manufacturing structure, Piyasak said.
Jiraporn Linmaneechote, assistant managing director for research at Phatra Securities, told the seminar that the picture of the property market at the beginning of this year was similar to the same period last year as many big developers announced new projects, especially condominiums.
“However, the change we have seen this year is Thai developers having partners from Japan to do condominium projects. Therefore, the number of new projects this year is expected to grow by 20-25 per cent to 65,000 units, of which 55-60 per cent are condominium projects. With partners making joint investments, the market share of major developers will increase as well,” she said.
She said Phatra was monitoring the demand for luxury condos after major developers have focused more on this segment, and it found that prices per square metre had reached Bt250,000-Bt400,000, so it is unclear that demand will be high enough to support such prices.
Jiraporn said that in the past, researchers had advised investors that condos priced below Bt2 million would replace the apartment market, but in fact sales in this segment are slower. Most potential buyers delay their decisions until the construction is complete because they want be sure they can make the mortgage payments.
She said the demand for condominiums near the transit extensions would be seen more clearly over the next couple of years.
She added that property developers would start actively promoting their new projects in the fourth quarter but if the market is not very responsive, they might postpone introducing new projects until next year, much like what happened last year. The launch of new projects, therefore, depends on the demand of consumers.
Phatra Securities estimates that the value of the residential property market in Bangkok and nearby provinces this year will expand by 17 per cent to Bt274 billion.
In the first four months, a total of 13,500 condo units were launched, representing total value of Bt45 billion.