The property market is expected to grow by 5-10% this year, led by the condominium sector and driven by myriad positive factors, say experts.
Atip Bijanonda, president of the Housing Business Association, said the purchasing power of potential buyers remains strong this year, particularly in Greater Bangkok, while banks are starting to lend to more prospective homebuyers.
“Condominiums will lead the market growth with a higher expansion than the overall market, as people’s lifestyle has changed,” Mr Atip said. “There will be no condominium oversupply. Developers are just concerned about the sales rate, which prevents them from over-investment.”
Prasert Taedullayasatit, president of the Thai Condominium Association, said large developers will continue to dominate the market, particularly in the condominium segment, as land costs for high-rise development remain high.
In the single-house segment, the market share of small- and medium-sized developers fell from 54% in 2013 to 34% last year. This portion will keep declining.
Kittipol Pramoj Na Ayudhya, vice-president of the Thai Real Estate Association, said hotels in all star categories will be boosted by tourism growth. The occupancy rate of Bangkok hotels last year was quite high at 80%, despite intensifying competition.
“The strong baht may have an impact on the tourism market, but it will affect only the budget segment,” Mr Kittipol said. “There will be new hotel supply in the future of about 20% of total supply, but strong growth in the tourism sector there should be no concern.”
Tourist arrivals have also boosted the retail sector, with retail sales growth of 10.6% in last year’s third quarter. Meanwhile, the new supply of retail space will still be limited. The retailer will have to adjust strategy to meet consumers’ changing expectations.
“The office market is very healthy, as vacancy rate is quite low at 8% and rental rates rise 4-5% per year,” Mr Kittipol said. “However, return on investment from office space is not as good as from apartments in prime locations like Sukhumvit.”
Don Nakornthab, senior director of the economic and policy department at the Bank of Thailand, said the central bank forecasts 3.9% GDP growth this year, driven by internal factors.
“The government’s investment in megaprojects, many of which were postponed from last year, will be a key driver for the country’s economic growth this year,” Mr Don said. “Other factors like tourism, export, and private investment are also in a positive trend.”
But interest rates will not be headed lower, he said at a seminar held yesterday by three real estate associations.
Meanwhile, external factors are on a positive trend, including the global economic growth of 3.9% during 2018-19 as predicted by the IMF. The US, Europe, and China are poised for an economic expansion.
Wichayayuth Boonchit, deputy secretary-general of the National Economic and Social Development Board, said the NESDB expects GDP growth this year of 4.1%, the highest in six years, fuelled by government spending, low-interest rates, and people’s rising income.
Benjarong Suwankiri, head of strategy and transformation at TMB Bank Plc, said the property market will grow an estimated 5-6%.
“Condominiums along mass transit lines and single houses and townhouse in the upper-end segment will continue to be healthy,” Mr. Benjarong said. “The low-end segment and provincial markets still are not good.”
Mortgage loan rejection rates remain high, he said, but they will gradually decline this year as banks regain their appetite to lend.
“Government spending and the Eastern Economic Corridor (EEC) initiative will play a key role in boosting the economy and sentiment this year,” Mr Benjarong said.
Pojanee Artarotpinyo, deputy secretary-general of the EEC Office, said 2018 will see the start of infrastructure development such as high-speed trains linking U-tapao and Suvarnabhumi airports and the surrounding cities.
“We are studying how many new cities should be developed,” Ms Pojanee said. “The Department of Public Works and Town and Country Planning (DPT) studied and suggested 11 new and existing cities [along high-speed lines].”
She said Chachoengsao will be a residential town for those working in the EEC. Chon Buri will be a financial centre and an aerotropolis, while Rayong will be a research and education hub.
“With the EEC, the unused land will be developed,” Ms Pojanee said. “Land price will rise. Travel will be more convenient and people will have various choices of jobs.”
DPT deputy director-general Anawat Suwannadej said the department is doing a comprehensive city plan for the EEC, which will span the provinces of Chon Buri, Rayong, and Chachoengsao. If the plan is completed, their existing city plans will be revoked.