Govt investments to start bearing fruit soon
The government's stimulus spending and infrastructure investment are expected to start having an impact on the economy this year, driving demand up in Bangkok's various property markets, according to Jones Lang LaSalle.
Economists anticipate interest rates staying low. While this will benefit developers in all markets that rely on lending, it will also contribute greatly to the affordability of homes for buyers.
Global oil prices have more than halved since June. While this will benefit the economy and indirectly the property industry, the residential and retail markets will benefit from improving household balance sheets, as energy costs absorb less consumer income.
Most developers and investors have remained well capitalised and showed a strong appetite to acquire existing income-generating properties or suitable land for development.
However, there is also a set of challenges, particularly with regards to the economy, upon which demand in most property markets largely relies.
While GDP is forecast to grow by 4 per cent, uncertainty remains, due to both internal and external factors such as the fragile global economic outlook.
High household debts will continue to confine the growth of demand for mid- to low-priced condominiums and houses. The Bangkok property market performed moderately well overall last year. Though all markets across the city were hit by the political turmoil in the first half, conditions in most of them picked up in the second half as the political situation started stabilising.
The dim economic outlook has overshadowed prospects in the property market, managing director Suphin Mechuchep said yesterday.
Among the factors that helped prevent these property markets from crashing last year were the generally fair balance of supply and demand and the return of political stability in the second half.
According to the company’s Thailand Property Intelligence Centre, the Bangkok office market registered a net take-up of 181,700 square metres in 2014, which is close to the average rate of 197,700 for the past five years, and above the 10-year average of 150,000.
The average office vacancy rate across the city fell from 10 per cent at the end of 2013 to 9.2 per cent at the end of 2014. Grade A office buildings in central business areas saw a bigger improvement, declining from 9 per cent to 6.1 per cent.
The high-end condo market with units starting at Bt150,000 per square metre saw no projects launched in the first half of last year, reflecting developers’ high concern over political uncertainty.
As the political situation calmed down, the market saw 1,140 units introduced in the second half, similar to 2013.
