CBRE RESEARCH | THAILAND

A S I A PA C I F I C R E A L E S TAT E

www.cbre.co.th
MARKET OUTLOOK | THAILAND

RESTART
THE UNEVEN
RECOVERY
2

CONTENTS

03
ECONOMY: RECOVER WITH RISKS

05
RESIDENTIAL: REALIGN THE PRICE

08
OFFICE: RESHAPE THE FUTURE OF WORKPLACE

11
RETAIL: SHIFT IN BEHAVIOURS PUSH FOR REFORM

14
HOSPITALITY: GUESTS AND TENANTS REFOCUS

17
INDUSTRIAL: RESILIENT DEMAND HINDERED BY TRAVEL BAN

19
CAPITAL MARKET: REVISIT PORTFOLIO AND INVESTMENT STRATEGIES
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THAILAND REAL ESTATE
MARKET OUTLOOK 2021

ECONOMY

RECOVER
WITH RISKS
4

ECONOMY – RECOVER WITH RISKS

HIGH UNCERTAINTY REMAINS
After weathering one of the biggest economic storms it has ever faced in 2020,
CBRE believes that the economy and activities in Thailand will slowly regain it
pace in 2021 after expected contraction of around 6.6% in 2020. The Bank of
Thailand projected the real GDP growth for 2021 and 2022 to be 3.2% and
4.8%, respectively. With tourism and exports being the two leading industries
driving the Thai economy, both have to deal with international travelling and
commerce, the speed of recovery will depend the distribution of vaccine
globally and in Thailand and on how quickly we can reopen our airports for
international tourists.
Given the high level of uncertainties of the COVID-19 including the new
strands and side effects of the vaccines, the projection will need to be revised
regularly as things could change overnight.
slower rate from high unemployment rate and household debt as the affects of
COVID-19 pandemic lingers.
We have seen stimulus packages from the government that focused on
promoting domestic tourism and boost spending of the locals such as “Rao-
Tiew-Duay-Gun” and “Kon-La-Khreung”. We believe that these packages will
be extended to at least the first half of 2021.
POLICY RATE STABLES WHILE HOUSEHOLD DEBT RISES
The policy rate will likely to be kept at 0.5%, the lowest policy rate ever
recorded, after it has been cut down three times in 2020 to stimulate the
economy. We believe that the worst time has passed. Businesses have learned
to adapt to the situation and reducing the rate further will not have a
significant impact to the economy.

TOURISM AND EXPORTS AS FIRST PRIORITIES
Meanwhile, the tourism and exports sectors will remain slow due to uncertainty
of COVID-19 situation abroad, limited number of tourist arrivals, and
economic recovery in trading partner economies.
Our key concern remains on the high level of household debt which got escalated by
the fact that many people have lost their jobs or source of income. This will have a
direct impact on the property market as people have less disposable income and
savings. Decisions will take longer to be made and every investment will be assessed
and reassessed.

Thus, the Thai economy will be inward-looking, relying heavily on domestic Overall, we expect the Thai economy will return to the pre-pandemic level within two
demand and public expenditure, while private consumption will expand at a years, and the recovery will be uneven among economic sectors.

Figure 1: Quarterly Real GDP Growth

20%

15%

10% 2008 Global 2018 US - China

Financial Crisis 2011 Flooding Trade war
5%

0%
2010 Civil unrest in 2014 Coup
-5% Bangkok

-10%

-15%
Source: Bank of Thailand and CBRE Research

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THAILAND REAL ESTATE
MARKET OUTLOOK 2021

RESIDENTIAL

REALIGN
THE PRICE
6

RESIDENTIAL - REALIGN THE PRICE

LIMITED NEW LAUNCHES PRICE BECOMES MORE REALISTIC

The Bangkok residential market has experienced negative impact from COVID- Since 2017, the price of Bangkok condominium has been on a constant sharp
19 pandemic as the purchasing power from both domestic and foreign buyers climb. In 2020, the average price per square metre for a new high-end
were pressured from the slow economic growth and uncertainty in recovery. In condominium development in downtown Bangkok was over THB 270,000 per
2020, the condominium market in the midtown/suburban area remained much square metre, fueled by the increasing land price and foreign purchasing
more active in terms of the number of newly launched projects when compared power. We have reached the point where middle-to-high income locals could
to the downtown area where price points are higher. no longer afford to buy a high-end condominium unit in the downtown area.

CBRE believes that the overall residential market will remain sluggish in 2021. In the COVID-19 period, CBRE has seen developers putting up discounts in
As developers focus on the remaining built-but-unsold inventory on hand, the completed buildings to be from 15% to 30% to clear their stocks and generate
number of new projects launching in 2021 will be limited. As announced by a revenue. The percentage of discount to close deals varies subject to the
number of top listed developers, most of the newly launched projects will affordable levels of target customers. For new projects, discounts of 5%-10%
continue to be in the midtown/suburban area and focus on affordable with realistic prices have proved to have good feedback from the customers
segments. The high acquired land price, especially in the downtown area, will who still have demand to buy a unit but have less purchasing power.
make it much more difficult for developers to lower the selling price without
impacting their profit margins. As developers realize that the targeted price might not be achievable in this
market situation, the executed price will have to be adjusted down to be more
Many top listed-developers have already announced their 2021 plans to look realistic with how much locals, who will be the main target for 2021, can
for new opportunities in new areas and focusing on increasing their financial afford. While this will hurt the profit margin, it will be crucial in drawing back
liquidity. buyers with limited spending power.

Figure 2: Newly Launched Condominium Units in Bangkok Figure 3: Average Asking Prices of Future Units Classified as High-end and
Above (Off-plan)
No. of Units Downtown Midtown/Suburban THB/sq.m. Silom/Sathorn Central Lumpini Sukhumvit
100,000 Riverside Average Price
400,000

350,000
80,000
300,000

60,000
250,000

200,000
40,000
150,000

20,000 100,000

50,000
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3
2020 2020 2020
2012

2014

2016

2018
Q1 2012

Q3 2012

Q2 2013

Q4 2013

Q1 2014

Q3 2014

Q2 2015

Q4 2015

Q1 2016

Q3 2016

Q2 2017

Q4 2017

Q1 2018

Q3 2018

Q2 2019

Q4 2019

Q1 2020

Q3 2020

Source: CBRE Research Source: CBRE Research

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7

RESIDENTIAL - REALIGN THE PRICE

FOCUS ON LOW-RISE HOUSING AND SMALLER DEVELOPMENTS DRAWING BACK FOREIGN BUYERS WILL BE KEY

Demand for low-rise housing continues to be consistent from end-user buyers.
In order to mitigate risks, developers will be moving into the low-rise housing
more as it could be developed in phases and dealing with only local real
demand presents lower risks of not being able to sell out the project. Low-rise
housing project that will perform well this year will not be more than 5 million
per unit in locations close to the new mass transit lines with affordability as key.
For condominium, CBRE believes that there is still demand in the market but
with lower budget. Developers will be focusing on developing smaller scale
development with low number of units to reduce investment size, easier to pass
the financing threshold from the banks and could fit better in a sub-location off
the main street. Not only that these new projects will be competing in price but
will need to compete in offering the right design and facilities that suits its
market segment as well.
SELECTIVE LUXURY MARKET CONTINUES TO PERFORM
Foreign interest in Thai properties remains strong but sales transaction has
diminished with travel restrictions.
The struggle against COVID-19 pandemic in every country has put everyone in
a worse financial situation compared to back in 2019 but CBRE strongly
believes that the intention to invest remains especially for second home and in
the market where prices are more affordable. CBRE believes that with the
recent second wave of COVID-19, even with the vaccine rollout, government
will still have a tight control over cross-border travelling. Relying on online
selling will not generate high volume of sales.
The policy to stimulate the real estate market is still fragmented. The
effectiveness of a scheme that was recently launched offering five-year
multiple-entry visa for buyers of properties worth THB 10 million in Thailand is
yet to be seen. The reduction of transfer fee and mortgage fees should also
apply to prices over THB 3 million to alleviate wider groups of market.

Based on the number of enquiries and transactions CBRE has done in 2020, it
is clear that the luxury residential market is still in high demand. This target
segment has high purchasing power but will be selective on the products they
will buy.

Branded residences and prime condominium developments with realistic

pricing achieved good sales volume but the decision-making time becomes
longer. Market sentiment towards realistic pricing and promotion is similar
across all the markets. Supply of large units which have been slow sales in the
past become more active for HNWI end-user buyers including housing,
downtown condominium and resort homes.

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THAILAND REAL ESTATE
MARKET OUTLOOK 2021

OFFICE

RESHAPE
THE FUTURE OF
WORKPLACE
9

OFFICE - RESHAPE THE FUTURE OF WORKPLACE

RETURNING TO THE “NEW” WORKPLACE Figure 5: New Metrics Informing Office Strategy
COVID-19 pandemic has created disruptions in the office market, especially on how
we work in offices. Remote working and work from home became word that is widely
spoken across every industry. It was a concept that once considered by many
companies but rarely implemented prior to COVID-19.

Even before the pandemic, many organizations have witnessed the change in
employee’s behaviours and requirements in working. The shift in workforce together
with the adoption of remote working has prompted a rethinking of workplace design
and how space is utilized.

It also transforms how companies calculate the number of office-based employees

and related workspace demand. The office space per employee ratio could be
reduced by at least 20% as workplace strategy is implemented. This opens up
numerous possibilities of office space reconfiguration, adding phone booths,
concentration zone, larger pantry or even a new townhall space. The function of a
headquarter will change from being the only place employees come to work to a
part of a bigger network of highly-agile workspace.

Employee-centric will be key as businesses must stay agile and align their business Source: CBRE Research
growth with the interests and expectations of employees and their preferred ways of
working. Each industry has its own catchment area for talents and operate differently. Figure 6: Post-Pandemic Office Dynamic

POST-PANDEMIC FLEXIBILITY

The importance of portfolio agility will become more prominent in the coming years
as occupiers consider a hybrid model of traditional office space along with a
combination of flexible space and remote working to provide flexibility and
convenience to the employees. This will require investment in new platforms to
support remote working and facilitate a shift from office-based workplaces to a
phygital (physical + digital) environment that enables employees to easily switch
between onsite and remote locations.

Yet, the success and effectiveness of remote working will depend on the function and
characteristics of each company and each business unit. Individual preference also
plays a major role in determining whether it is more or less productive for each
person to work at home.

Source: CBRE Research

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10

OFFICE - RESHAPE THE FUTURE OF WORKPLACE

NEW SUPPLY PRESSURES RENTAL GROWTH
One of our key concerns for the future of office market is the amount of future
supply in pipeline. Over 1.2 million square metres of office space are being
constructed across Bangkok, many of which are located in the CBD area and
are part of large-scale mixed-use development. In 2021, 334,000 square
metres are expected to be completed, increasing the total office supply in
Bangkok to 9.49 million square metres.
be lower than forecasted and rental growth of existing buildings will be flat.
While new projects could still achieve high rental rate, older office buildings
have a bigger challenge in asking the same rent as their buildings deteriorate.
Both hardware and software of older buildings will need to be upgraded to
remain competitive in the market to provide better user experience, retain
tenants and achieve at least the same rental rate they used to achieve.

However, COVID-19 and economic situation in Thailand could affect the
opening dates and launch dates of the future projects. Landlords are also more
aware of the market condition that large amount of new supply is coming. As a
result, we have started seeing landlords shifting their completion dates to avoid
competition.
This will have a downward impact to the rental growth. CBRE believes that in
2021 will see a minimal rental growth across the market due to the slow
economic growth and uncertain market condition. Rents for new properties will
SHIFTING TO TENANT’S MARKET
As supply increases and occupancy rate drops, the market will change to a
tenant’s market where tenants, especially large tenants who occupy large office
space, have more negotiation power for better terms and flexibility from the
landlords. This could prove to advantageous for tenants to relocate or expand
into newer buildings.

Figure 7: New Supply and Net New Take-up

sq.m. Vacancy Rate
New Supply Annual Net Take-Up Vacancy Rate
500,000 18%

450,000 16%
400,000 14%
350,000
12%
300,000
10%
250,000
8%
200,000
6%
150,000

100,000 4%

50,000 2%

0 0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: CBRE Research

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THAILAND REAL ESTATE
MARKET OUTLOOK 2021

R E TA I L

SHIFT IN
BEHAVIOURS
PUSH FOR
REFORM
12
R E TA I L - S H I F T I N B E H A V I O U R S P U S H F O R R E F O R M
RISING FROM THE RUIN
In the first half of 2020, the Thai retail industry was heavily impacted by the
COVID-19 pandemic as the Thai government announced to temporarily close
all non-essential stores while implementing social distancing and partial
lockdown measures.
After the closure were lifted in the second half of the year, the retail industry
suffered from the significant decrease in traffic, decline in consumer’s
confidence and increase in household debt. Both large-scale and small-scale
retail centres, especially in Downtown area where we have seen a drop in
occupancy rate, needed to adapt to retain tenants.
The consumer confidence and activities in retail scene managed to recover in
the last quarter of the year as preventive health measures were eased and the
Thai government approved two subsidized shopping campaigns which were
“Kon La Khreung” and “Shop Dee Mee Kuen”.
The effectiveness of these existing campaigns and future stimulus measures
from the government could be the key drivers in improving the retail market.
Yet, it is clear that domestic demand alone will not be able to sustain the retail
industry in Thailand and timeline to reopen the country for foreign tourists will
be extremely crucial for the survival of the industry.
While recovery is expected in 2021, most respondents to CBRE Asia Pacific’s
October 2020 Retail Occupier Flash Survey stated that business activity is
unlikely to fully recover to pre pandemic levels until H2 2021.
LANDLORDS NEED TO ADAPT TO THE EVOLVING RETAIL SCENE
Similar to other industries, managing cashflow became the key strategy for
retail businesses. Retail landlords will have a closer look at their investment
plan. CBRE believes that there will be reconsideration of planned developments
which have not started construction and require high investment to preserve
financial stability. Overseas investments will also be limited. Existing branches
that are not profitable will be shut down to reduce operating costs.
Given that the government has lifted many restrictions in retail sectors,
ASIA PACIFIC REAL ESTATE MARKET OUTLOOK 2021 | THAILAND
landlords are more likely to be less flexible on offering rental discounts to
tenants as it comes to the time for landlords to rebalance between profitability
and footfall. On the other hand, they will offer more flexible rental structures
such as shorter lease terms and different rental rate for kitchen and seating
area for F&B. With the tenant’s adaptation to cost effectiveness by reducing
the sizes of rental space results in lower occupancy level.
Landlords will also be reassessing their trade and tenant mix allocation for the
long run. CBRE expects to see more innovative offerings to be put on a physical
space. It could be a blend of indoor and outdoor area with a richer range of
offerings such as unique restaurants and café, a family-friendly entertainment
area, a pet-friendly zone to give customers a more hybrid shopping experience.
Locals will also be in the focus again instead of tourists according to obscured
tourism outlook. The financial challenges could pressure landlords to
investigate tenant’s performance more carefully.
Figure 8: Time Needed for Business Activity to Return to Pre-Pandemic Levels
37%
% of respondents
29%
16%
7%
6% 5%
Sales unlikely to recover to
pre-pandemic levels until H2 2021
Source: Asia Pacific Retail Occupier Flash Survey, CBRE Research, October 2020.
CBRE RESEARCH | © 2021 CBRE, INC.
13

R E TA I L - S H I F T I N B E H A V I O U R S P U S H F O R R E F O R M

RETAILERS REFORM AND RESIZE CAUTIOUS CONSUMERS DEMAND FOR MORE

In terms of retailers, resizing and reformatting rental space will become a more
and more important approach as it can help them to be more cost-effective
and more agile at the same time. Major brands that used to rent bigger retail
space will start negotiating to rent a smaller space. There will be significant
movements in space requirement of key tenants. Banks are moving online and
required less space for their branches. F&B will pay more attention to delivery
service; thus a larger kitchen space is needed. Fashion stores will become more
omni-channel.
We may see retailers closing down branches that do not generate profit to
decrease operating costs. Some retailers have already stated that their
expansion plans for 2021 will be on hold, focusing on retaining the revenue
from their current stores.
Due to the decline in consumer’s confidence in spending and the increase in
household debt since 2019, shoppers, especially those in the mid-to-low-
income level, will be more cautious in shopping for their day-to-day needs and
buy only what is the most necessary instead of luxury products in 2021.
Spending will be more frequent but in smaller amount as cash-on-hand will be
the key focus for consumers.
Moreover, CBRE believes that customer expectations towards both offline and
online shopping will be higher in 2021 as consumers seek for experience, not
just products. For e-commerce, consumers will expect seamless shopping
experience with faster and free delivery. They are also surrounded by a number
of alternative choices to buy products delivering from anywhere around the
world.

Differentiation and experience-generating contents will continue to be essential

in attracting tenants, offering services or experience that customers could not Figure 9: Thailand Consumer Confidence Index
get from online shopping. These tenants will also gain more attention and
bargaining power with the landlords as they will generate traffic to the malls. 120.0

110.0
In terms of rent structure, CBRE expects to see more requests from tenant side
in changing rental status from permanent to temporary term. They will keep 100.0
developing a smaller model such as a pop-up store and a kiosk to retain 90.0
profitability during the uncertain market situation.
80.0

70.0

60.0 50.1
Dec 2020
50.0

40.0
47.2
30.0 April 2020

20.0

Source: The University of the Thai Chamber of Commerce

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THAILAND REAL ESTATE
MARKET OUTLOOK 2021

H O S P I TA L I T Y

GUESTS AND
TENANTS
REFOCUS
15

H O S P I TA L I T Y - G U E S T S A N D T E N A N T S R E F O C U S

AN INWARD-LOOKING YEAR FOR TOURISM DELAYS IN HOTEL OPENING

As the number of tourist arrivals to Thailand dropped from 40 million in 2019 As of last year, at least 15 hotels with more than 3,000 keys combined were
to less than 7 million in 2020 as travel restrictions were put in place, the scheduled to open in Bangkok in 2021. With the new wave of COVID-19 right
Bangkok hospitality market took one of the most significant turns in its history. before New Year holiday and doubts surrounding vaccine distribution and success
rate, many projects could be postponed until the situation improves. Some hotels
With recovery uncertain, hotel owners and operators are forced to look to the might choose to open partially or only opening its F&B, using the low traffic time as
domestic demand as the only source of revenue. Coming up with promotions a soft launch period while keeping the operating costs minimal.
and new ways of operating such as fitness membership programmes for non-
guests and work-from-hotel package will be crucial compensate the drop in
room revenue. Everything needs to be revamped, from hotel operation to
marketing campaigns, for survival. Figure 10: Hotel Transformation under the New Normal
2021 may continue to be a challenging and exhausting year for the hospitality
sector as most owners and operators have been operating under COVID-19
precautions with limited revenue for over a year. Bangkok, unlike other resort
destinations within driving distance like Pattaya and Hua Hin, has not been the
key beneficiary of the government campaigns to promote domestic tourism and
“staycation” trend did not seem to catch on in Bangkok.

The main challenge in focusing to the domestic demand is the lower spending power
compared to international tourists, especially in this period. Guests will seek for only
the best deals available with add-on services and compare it with what they can get
at the same cost if they travel to outside of Bangkok.

It is unlikely that the Thai tourism industry will return to the 2019 level until at least
2022, depending on the stability of COVID-19 situation after global distribution of
the vaccine which probably take at least six to eight months after distribution and the
Source: CBRE Research
economic recovery of our key inbounds tourist markets like China, Russia, Japan and
India.

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16

H O S P I TA L I T Y - G U E S T S A N D T E N A N T S R E F O C U S

INCREASING COMPETITION, DECREASING EXPATS: A BIG CHALLENGE

FOR SERVICED APARTMENTS

Japanese expatriates, the key market feeder of the long-term rental market to Figure 11: Bangkok Hotel Performance
serviced apartments in Bangkok, has continued to decline from cost-cutting
policy of many companies and relocation to other emerging market like 100.0%
100%
Vietnam as the management roles are now replaced with Thais which has lower
costs. At the same time, the number of new expatriates coming in will be 80.0%
80%
limited in 2021.
60.0%
60%
Serviced apartment market is another sector which has been directly impacted
by COVID-19. Average occupancy of serviced apartments in Bangkok has
40.0%
40%
dropped by 27 percentage points Y-o-Y as of the third quarter of 2020, down 20.0%
20%
to 53.1%. While the supply in serviced apartment market continue to increase,
as serviced apartments in Bangkok also operates in daily rental and compete 0%
0%
directly with hotels, the competition is also coming from the future hotel supply

Jul-07

Jul-08

Jul-09

Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Jul-19

Jul-20
Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20
of over 9,000 keys in the next three years.

Yet, there are potential market feeders which have seen a promising trend prior
to the COVID-19 pandemic such as Chinese and Filipino expatriates due to the Source: STR
relocations of China-based manufacturers and higher demand for English-
speaking staff as the number of international schools in Bangkok increases.
CBRE believes that this trend will continue when the COVID-19 situation
improves and will be a good opportunity for serviced apartments operators to Figure 12: Total Expatriates in Thailand by Nationality
tap into.
Japanese Chinese Filipino
Indian British American
40,000
RETAINING TENANTS WITH DISCOUNTS AND FLEXIBILITY
35,000
Serviced apartment rental price discount will continue into 2021 with newer 30,000 28,532
developments offering 5-10% range while older projects which have not done 25,000 24,455
major renovations will be offering at 10-20% range in order to maintain
20,000 18,534
occupancy rate. In an uncertain market, landlords will also be offering a more
flexible contract to tenants such as shorter rental terms at the same price. 15,000 12,952
10,000 9,543
More pressure will be towards old apartment owners as discounted serviced 7,087
5,000
apartments rate with more services could encourage tenants to upgrade their 0
accommodations at the same cost. 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q4 Q1 Q2 Q3 Q4
2019 2020 2020 2020 2020

Source: Foreign Workers Administration Office

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THAILAND REAL ESTATE
MARKET OUTLOOK 2021

INDUSTRIAL

RESILIENT
DEMAND
HINDERS BY
TRAVEL BAN
18

INDUSTRIAL - RESILIENT DEMAND HINDERED BY TRAVEL BAN

TECH DRIVES GROWTH IN MODERN LOGISTICS PROPERTY

The improving convenience and penetration of online shopping and the spread
of COVID-19 in Thailand has acted as a catalyst of consumers to adapt to
e-commerce and welcome digital economy even more. This has driven and
continue to drive the demand for Modern Logistics Property (MLP) in Thailand
which has proven to be one of the least affected industries during the COVID-19
pandemic.
HIGH DEMAND FOR SERVICED INDUSTRIAL LAND PLOTS HINDERS BY
TRAVEL RESTRICTIONS
While only 2,000 rai of Serviced Industrial Land Plots (SILPs) were added to the
market in the first nine months of 2020, over 4,200 rai are in pipeline and
expected to be completed in 2021, most of which are located in the EEC
provinces.

Over 400,000 sq.m. of new MLP supply will come into the market within 2021,
the vast majority of which will be in the built-to-suit format which has less
investment risks for the developers. However, due to the ongoing travel
restrictions, new contract signings could be difficult which could then affect the
net take-up in 2021 to not be able to catch up with the rapidly increasing
supply. We could expect to see an increase in vacancy rate while in MLP if the
situation continues.
RELOCATION BENEFITS READY-BUILT FACTORY
The ongoing travel restrictions have affected the inspections of contract signings for
SILP, reflected in the declining number of new land sold as developers claimed the
14-days quarantine policy is disincentivizing investors to travel to Thailand to close
the deal.
The price of SILPs will not decrease as developers believe demands are still there in
the market but only delayed by the quarantine policy as they have set their sales
target to increase in 2021, believing that the travel restrictions will be eased and
vaccines are distributed.

The diversification and refocusing of supply chains will continue to prompt Figure 13: Thailand Foreign Direct Investment
many China-based manufacturers to consider relocating their production bases
to Southeast Asia where the costs are lower. THB (million)

73,986
73,210
There has been a shift in demand as investors have been increasingly more 80,000

60,966
interested in buying factories rather than renting them to have more control 70,000

50,455
48,924
over their premises. While many developers slowed down the speculative

47,810

44,649

44,404
60,000

41,844
development of Ready-Built Factory (RBF), the take-up has been slowly

38,708

35,232
increased by relocating manufacturers and new entrants.

32,980
50,000

32,326
40,000
It is also important to keep an eye on what would happen to the policy regarding the

18,957

15,105
US-China Trade War after the US presidency has transitioned from Donald Trump to 30,000

11,503
Joe Biden in 2021. 20,000
10,000
0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Q1 2020

Q2 2020

Q3 2020
Source: Bank of Thailand
Note: Latest data available was from Q3 2020. The figure is revised every quarter.

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THAILAND REAL ESTATE
MARKET OUTLOOK 2021

C A P I TA L M A R K E T S

REVISIT
PORTFOLIO &
INVESTMENT
S T R AT E G I E S
20

C A P I TA L M A R K E T S - R E V I S I T P O R T F O L I O A N D I N V E S T M E N T S T R AT E G I E S

TIME FOR SERIOUS ASSET MANAGEMENT

The concept of proper asset management has not been widely explored Figure 14: Keys to Asset Management
amongst many Thai landlords and property owners as has largely been a
landlord’s market for more than a decade whereby landlords did not need to
actively assess their properties’ performance and potential for them to increase
in value.

The shift in demand and increasing competition from new, more modern supply
in many sectors are driving change in the property market, with COVID-19
acting as an accelerant. Landlords and property owners will need to be
proactive in securing their income streams and managing their costs while
improving the hardware and software of their portfolio to maximize value.

Landlords will need to take a proactive approach in a more dynamic market to

generate positive performance for their assets. It will be more important than Understand
ever to understand the threat from competitors, how occupier requirements are
Assess opportunities
changing, and whether it is time to invest in your older assets or exit. the market in your portfolio

MORE PROPERTIES WILL BE UP FOR SALE

Prioritize high Seek specialist
COVID-19 pandemic has created cashflow shortage for hotel assets and lower potential properties advice
occupancy and higher costs for apartments and office buildings. The increasing
competition has also put pressure on landlords, particularly for older buildings
which have not been renovated or upgraded to compete with newer buildings.
The prolonged economic downturn and uncertainty of the market turnaround
will make some landlords and property owners consider putting their assets in
the market for sale to unlock cash.

This could present a good opportunity for investors who look for properties at a
discount. While reaching an agreement on price could be easier than in 2020,
the expectation gap between sellers and buyers will remain the key issue.

Source: CBRE Research

ASIA PACIFIC REAL ESTATE MARKET OUTLOOK 2021 | THAILAND CBRE RESEARCH | © 2021 CBRE, INC.
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C A P I TA L M A R K E T S - R E V I S I T P O R T F O L I O A N D I N V E S T M E N T S T R AT E G I E S

LAND PRICE BECOMES MORE REALISTIC TRIMMING THE FAT ON LAND BANKS

After a near constant increase in land prices for the past decade, CBRE
believes that, overall land prices in prime locations will remain relatively flat or
even decrease due to the economic slowdown with no new record-breaking
deals. Luxury condominium development became the only use that made
financial sense for freehold land development in the downtown area which is
not sustainable in a long run.
In midtown and suburban areas, prices will increase in some areas with new
mass transit and road expansion. However, as developers are becoming more
price-sensitive in acquiring new sites, speculative land acquisition in the hope
of price increase will be only for the brave.
PICKING ONLY THE PRIME SITES
In 2020, property developers were cautious in acquiring new sites and proceed
to dispose of existing land banks which are no longer suitable for development
during this timing. In 2021, even though most residential property developers
have adjusted down their revenue target and the number of new project
launches, they continue to acquire new development sites in 2021 if the prices
are feasible for middle income market especially for housing and townhouses
in mid-town and suburb locations and new mass transit routes. However, while
investors and developers are still keen on pursuing their investments, the
decision-making time will be longer than usual.
With financial stability and liquidity as the focus, CBRE has seen many
developers with large landbanks putting some plots up for sale as they have
lower development potential. Developers will continue to focus on reducing
their unsold inventory and unlocking capital in their land banks and reducing
their tax burden.
Some plots which developers decide to keep will be developed or leased in the
short term to generate income-producing properties such as a market or
parking until the market recovers.
REDUCING INVESTMENT RISKS
As developers look to reduce investment risks, CBRE believes there will
continue to be new JVs between local developers or with foreign partners who
are already in and know the Bangkok market. The development scale will also
be smaller to decrease investment size. CBRE believes that development with
project value less than THB 500 million will be more common this year.

CBRE believes there is still demand for prime freehold and leasehold sites in
Bangkok while developers are taking a step back to reassess the level of supply
and demand in the market and wait for final details on the new Bangkok City
Plan that will reduce development restrictions in several areas especially in the
midtown and suburban locations along future mass transit routes.

ASIA PACIFIC REAL ESTATE MARKET OUTLOOK 2021 | THAILAND CBRE RESEARCH | © 2021 CBRE, INC.
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C O N TA C T S

Thailand Research
Rathawat Kuvijitrsuwan Mayurachat Tipparat Aaron Kuvanan
Head of Research & Consulting Manager Senior Analyst
rathawat.kuvijitrsuwan@cbre.com mayurachat.tipparat@cbre.com aaron.kuvanun@cbre.com

Pakapon Utaobin Onchanok Nawapruek Natchaya Promsuwan

Senior Analyst Senior Analyst Analyst
pakapon.utaobin@cbre.com onchanok.nawapruek@cbre.com natchaya.promsuwan@cbre.com

Chontida Asavahame Pawika Thienwongpetch Supawit Mahaguna

Analyst Analyst Analyst
chontida.asavahame@cbre.com pawika.thienwongpetch@cbre.com supawit.mahaguna@cbre.com

Yanisa Dechwattanatam Thanawin Suppakarnpanich

Analyst Analyst
yanisa.dechwattanatam@cbre.com thanawin.suppakarnpanich@cbre.com

Global Research Leadership

Richard Barkham, Ph.D., MRICS Neil Blake, Ph.D. Henry Chin, Ph.D
Global Chief Economist & Global Head of Forecasting and Analytics Head of Research, APAC/EMEA
Head of Americas Research EMEA Chief Economist henry.chin@cbre.com.hk
richard.barkham@cbre.com neil.blake@cbre.com

Spencer Levy
Chairman Americas Research
& Senior Economic Advisor
spencer.levy@cbre.com

ASIA PACIFIC REAL ESTATE MARKET OUTLOOK 2021 | THAILAND CBRE RESEARCH | © 2021 CBRE, INC.
T H A I L A N D R E A L ES T A TE
MARKET OUTLOOK 2021

CBRE RESEARCH

This report was prepared by the CBRE Thailand Research Team, which forms part of CBRE Research – a network of preeminent researchers who collaborate to provide real estate market research and econometric forecasting to real
estate investors and occupiers around the globe.

All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections, has been obtained from materials and sources believed to
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