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Thailand Real Estate Report Q1 2013

Thailand Real Estate Report Q1 2013

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Additional Information

Price	$1,175.00
Publisher	Business Monitor International
Date of Report	Sep 1, 2013

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Quick Overview

The Thailand Real Estate report examines the commercial office, retail, industrial and construction
segments in the context of a subdued economy whose commercial real estate market is currently
characterised by its reconstruction efforts.
With a focus on the principal cities of Bangkok, Rayong and Pattaya the report covers the rental market
performance in terms of rates and yields over the past 18 months and examines how best to maximise
returns in the commercial real estate market, while minimising investment risk and exploring the impact
of global economic woes upon the sector. The key potential growth areas driven by increasing activity
reconstruction damage caused by the 2011 floods are also explored alongside newly collected data
covering rents and yields for the first six months of 2012.
Concerns remain prominent among investors. However, Chinese corporate interest in the Thai real estate
sector is coming to the surface. Following a recent business match-making roadshow to China, a number
of Chinese firms have shown an interest in international collaboration. Thailand's stock as an investment
destination among Chinese firms is rising, and the local Thai real estate sector is one industry which has
been highlighted as an area of growing overseas interest.
Key Points
?? Reconstruction efforts contributed significantly to a strong rebound from an 8.9% y-o-y
contraction in real GDP growth in Q411 to 0.3% y-o-y growth in Q112. However, we view these
as one-off effects that will wear off over the coming months. Moreover, given that we do not see
the case for a strong pickup in external demand, we expect real GDP growth to remain subdued
at 4.0% for 2012, below average consensus forecasts of 5.1%.
?? We continue to expect a modest recovery for Thailand's construction sector in 2012, with the
underlying assumptions for a recovery (such as the implementation of flood prevention
measures, robust building construction activity and conducive monetary conditions for
construction) still holding firm.
?? Despite the better-than-expected real GDP growth numbers, which showed that Thailand's
economy grew by a seasonally adjusted 3.3% quarter-on-quarter (q-o-q) in Q212, we are
maintaining our view that full-year growth will come in at just 4.0% in 2012. Recent economic
data across the region continue to indicate a sustained slowdown in exports. We believe that the
true extent of trade linkages between China and economies in the South East Asian region, and
the resulting implications of an economic slowdown in China on the Thai economy, have been
underappreciated by Thai policymakers.
?? The latest move by the Securities and Exchange Commission (SEC) to relax rules for private
equity and venture capital firms to operate in Thailand is in line with our view that the
government will introduce further incentives to boost private sector investment and foreign
direct investment (FDI). The move should also support the country's aim to cement itself as the
automotive production hub in the region. Should we continue to see a sustained pickup in FDI
inflows and private sector investment over the coming months, we would consider upgrading our
growth outlook for the economy in 2013.

Table of Contents

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 7
Thailand Real Estate/Construction SWOT ............................................................................................................................................................ 7
Thailand Political SWOT ...................................................................................................................................................................................... 8
Thailand Economic SWOT .................................................................................................................................................................................... 9
Thailand Business Environment SWOT .............................................................................................................................................................. 10
Market Overview ............................................................................................................................................ 11
Market Analysis - Office ............................................................................................................................... 16
Supply And Demand............................................................................................................................................................................................ 16
Rents And Yields ................................................................................................................................................................................................. 16
Table: Historic Rents - 2011-2012 (THB per m2/month) .................................................................................................................................... 17
Table: Net Yield, 2011-H112 (%) ....................................................................................................................................................................... 17
Table: Terms Of Rental Contract/Leases - H112 ............................................................................................................................................... 17
Industry Forecast Scenario ...................................................................................................................................................................................... 18
Table: Forecast Rents - (THB per m2/month) .................................................................................................................................................... 18
Table: Forecast Net Yield, 2010-2017 (%) ......................................................................................................................................................... 18
Market Analysis - Retail ............................................................................................................................... 19
Rents And Yields ................................................................................................................................................................................................. 19
Table: Rents - 2011-2012 (THB per m2/month) .................................................................................................................................................. 20
Table: Net Yield, 2011-H112 (%) ....................................................................................................................................................................... 20
Table: Terms Of Rental Contract/Leases - H112 ............................................................................................................................................... 20
Industry Forecast Scenario ...................................................................................................................................................................................... 21
Table: Forecast Rents - (THB per m2/month) .................................................................................................................................................... 21
Table: Forecast Net Yield, 2010-2017 (%) ......................................................................................................................................................... 21
Market Analysis - Industrial .......................................................................................................................... 22
Supply And Demand............................................................................................................................................................................................ 22
Rents And Yields ................................................................................................................................................................................................. 23
Table: Historic Rents - 2011-2012 (THB per m2/month) .................................................................................................................................... 24
Table: Net Yield, 2011-H112 (%) ....................................................................................................................................................................... 24
Table: Terms Of Rental Contract/Leases - H112 ............................................................................................................................................... 24
Industry Forecast Scenario ...................................................................................................................................................................................... 25
Table: Forecast Rents - (THB per m2/month) .................................................................................................................................................... 25
Table: Forecast Net Yield, 2010-2016 (%) ......................................................................................................................................................... 25
Forecast Scenarios ....................................................................................................................................... 26
Infrastructure Report ............................................................................................................................................................................................... 26
Table: Thailand Construction And Infrastructure Industry Data, 2009-2016 ...................................................................................................... 26
Table: Thailand Construction And Infrastructure Long-Term Forecasts, 2014-2021 .......................................................................................... 27
Construction and Infrastructure Forecast Scenario ............................................................................................................................................ 28
Macroeconomic Outlook .......................................................................................................................................................................................... 33
Table: Thailand - Economic Activity .................................................................................................................................................................. 35
Real Estate Risk Reward Ratings ................................................................................................................. 36
Real Estate/Construction Risk/Reward Ratings ....................................................................................................................................................... 36
Table: Asia Pacific Real Estate Risk/Reward Ratings......................................................................................................................................... 36
Thailand's Business Environment ............................................................................................................................................................................ 36
Table: BMI Business And Operation Risk Ratings .............................................................................................................................................. 37
Table: BMI Legal Framework Rating ................................................................................................................................................................. 39
Institutions .......................................................................................................................................................................................................... 40
Infrastructure ...................................................................................................................................................................................................... 43
Table: Labour Force Quality .............................................................................................................................................................................. 44
Market Orientation ............................................................................................................................................................................................. 45
Table: Asia, Annual FDI Inflows ........................................................................................................................................................................ 46
Table: Trade And Investment Ratings ................................................................................................................................................................. 48
Table: Top Export Destinations, 2002-2009 (US$mn) ........................................................................................................................................ 49
Operational Risk ................................................................................................................................................................................................. 50
Competitive Landscape ................................................................................................................................ 51
Company Profiles .......................................................................................................................................... 55
Central Pattana (CPN) ....................................................................................................................................................................................... 55
Italian-Thai Development Public Company Limited (ITD) ................................................................................................................................. 56
Demographic Data ......................................................................................................................................... 57
Table: Thailand's Population By Age Group, 1990-2020 ('000) .......................................................................................................................... 58
Table: Thailand's Population By Age Group, 1990-2020 (% of total) ................................................................................................................. 59
Table: Thailand's Key Population Ratios, 1990-2020 ......................................................................................................................................... 60
Table: Thailand's Rural And Urban Population, 1990-2020 ............................................................................................................................... 60
BMI Methodology .......................................................................................................................................... 61
How We Generate Our Industry Forecasts .............................................................................................................................................................. 61
Construction Industry .............................................................................................................................................................................................. 62
Bank Lending ........................................................................................................................................................................................................... 63
Real Estate/Construction Business Environment Rating .......................................................................................................................................... 63
Table: Weighting Of Indicators .......................................................................................................................................................................... 64
Sources .................................................................................................................................................................................................................... 66