ROOM TO GROW
Demand for office space remains high in Thailand, and especially in Bangkok; however, competition from the AEC as well as a lack of supply has forced the government into action, which has established a number of targets and goals for the sector.
Growing demand in Bangkok's office space and commercial property is helping to strengthen Thailand's real estate sector at a time when regional competition is fiercer than ever. The recent integration of Southeast Asian nations into the single market ASEAN Economic Community (AEC) has encouraged companies, local and multinationals alike, to rethink their regional presence, if not entire production chains. As such, the Thai government has pushed through various incentives—from Special Economic Zones (SEZs) to nationwide infrastructure upgrades—in a bid to retain the country's competitive advantage as the region's prime investment destination.
One such "pull" factor devised by the Thai government has been to outperform regional rivals in the World Bank's ease of doing business index, where Thailand was ranked 26th out of 189 countries in 2014. While regime change has since pulled it down to 49th in the past two years, in April 2016 the government announced it was targeting a top 20 ranking by 2018. An early knock-on effect has been that office demand in the capital is expected to remain strong, signaling investor confidence in the government's schemes. According to property consultancy Colliers International Thailand, demand for Bangkok's office space in 2015 exceeded 160,000sqm in total. Conversely, while demand for new offices in the capital is on the rise, supply is limited, both in numbers and location: throughout the peak demand in 2015, a total of 96,450sqm of office space was completed. And while this figure is set to more than double to 195,245sqm in 2016, this is still below the average annual increase of 200,000-300,000sqm, which suggests demand will continue to grow this year, according to Colliers. Moreover, less than a quarter of this fresh supply will be Grade A, or concentrated in Bangkok's central business district (CBD), with the remaining 147,150sqm built toward the outskirts of the city.
These factors have subsequently influenced two crucial occurrences: a solid rise in commercial property prices; and the natural infrastructural expansion of the capital. With the occupancy rate in the CBD already topping 93.5% at an average monthly rate of THB905 ($26) per sqm, property owners have begun raising rental prices in 2016 to THB1,000 per sqm and above. This is helping to boost an already healthy real estate sector in Thailand as companies from across the spectrum, from developers to renovators, begin to seize the moment.
Speaking to TBY, Sitthirat Watcharaporn, the General Manager of Lixil Thailand, said out of the four segments the Japanese building materials manufacturer caters to—residential, hotels, government projects, and commercial—the latter will drive the company's growth in the coming years. “With investments in infrastructure work stimulating the economy, there is a lot of potential in the commercial area; and there will be a lot more renovation projects coming up."
Similarly, the surging redevelopment of the city's less central areas is helping ease pressure away from the CBD and driving sector-wide business opportunities to previously unindustrialized pockets. In his exclusive interview with TBY, Kavin Kanjanapas, the CEO of BTS Group—which owns the urban mass-transit "spine" running through Bangkok's center, the first and only privately held track in the world—explained that the company would be doing just that by adding an extra 108km of mass transit line to the existing 36km over the next five years.
ROOM TO GROW
TABLE OF CONTENTS
Review: Diplomacy
The Times are Changing
The West may have taken a dim view on the 2014 coup, but China has been less judgmental about Thailand's domestic policy and the two countries have grown closer over the past couple of years.The West may have taken a dim view on the 2014 coup, but China has been less judgmental about Thailand's domestic policy and the two countries have grown closer over the past couple of years.
read articleGuest Speaker
HE Maithripala Sirisena, President, Democratic Socialist Republic of Sri Lanka
TBY talks to HE Maithripala Sirisena, President of the Democratic Socialist Republic of Sri Lanka, on celebrating 60 years of relations with Thailand, boosting bilateral trade, and potential opportunities with the AEC.
read articleFocus: Special Economic Zones
Zone Home
With numerous upcoming major trade deals like the TPP and CAFTA, in addition to Thailand joining the ASEAN Economic Community, the country is developing a host of strategically located and incentivized SEZs to take advantage of the upcoming opportunities.
read articleFocus: Auto Sector
Driving Force
A combination of slower global economic growth and weaker domestic purchasing power suggests that Thailand's renowned automotive sector is heading for flat growth in 2016, thereby encouraging the government to promote cutting-edge innovation across the industry.
read articleFocus: Gems & Precious Stones
Shine Bright
As a key driver of the economy, Thailand's vast manufacturing sector comes in different shapes and sizes—and colors, for that matter. One segment to have really emerged as a sparkling export opportunity over the past two decades has been the country's gems and precious stones industry.
read articleInterview
Dr. Pichet Durongkaveroj, Minister, Science and Technology
TBY talks to Dr. Pichet Durongkaveroj, Minister of Science and Technology, on the initiatives to boost innovation in the country, facilitating greater private investment, and fostering mutually beneficial partnerships with countries.
read articleFocus: E-Commerce
Down the Wire
In 2014, when Chinese e-commerce giant Alibaba made headlines for listing the largest global IPO in history (USD25 billion), many had come to recognize that the industry, which was typically dominated by Silicon Valley heavyweights, was gravitating drastically eastward.
read articleInterview
Anantachai Kunanantakul, Chairman & CEO, Siam Eastern Industrial Park (SEP)
TBY talks to Anantachai Kunanantakul, Chairman & CEO of Siam Eastern Industrial Park (SEP), on the development of the park, the benefits on offer, and plans to further develop the country's eastern seaboard.
read articleInterview
Kan Trakulhoon, Head of Working Group , Eastern Economic Corridor (EEC)
TBY talks to Kan Trakulhoon, Head of Working Group of the Eastern Economic Corridor (EEC), on the background of the EEC project, the government's push to build up infrastructure in the country, and his projections for the coming year.
read articleFocus: Water Shortage
A Drop At a Time
In 2016, many Thai's across the Kingdom will be looking out for weather forecasts—rather than economic ones—as the key indicator for the country's economic sustainability. Water is becoming an increasingly precious global commodity as populations and temperatures increase.
read articleReview: Education
Many Brains to Gain
Thailand has long suffered from an ineffective education system, with a large number of dropouts and graduates not equipped to deal with the demands of the 21st century. However, the government has been taking actions in a bid to get serious about much-needed education reform.
read articleInterview
Weerasak Kowsura, Board Chairman, Thailand Convention & Exhibition Bureau (TCEB)
TBY talks to Weerasak Kowsura, Board Chairman of the Thailand Convention & Exhibition Bureau (TCEB) & Board Chairman of Designated Areas for Sustainable Tourism Administration (DASTA), on the country's booming MICE industry and the benefits of community-based tourism.
read articleInterview
Proudputh Liptapanlop , Executive Director, Proud Real Estate
TBY talks to Proudputh Liptapanlop and Pasu Liptapanlop, Executive Directors of Proud Real Estate, on the company's development plans for Hua Hin, the prospects of the industry, and their expectations for the future.
read article