Thailand Real Estate Report Q3 2012

Published : June 2012
No. of Pages : 63

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Aided by a rebound in economic activity (BMI’s forecast for real GDP growth y-o-y in 2012 remains
unchanged at 4.0%), BMI is forecasting a modest recovery in the Thai construction sector in 2012.
Although we believe several factors taking place in Thailand – including a poor fiscal position, slow
progress in raising infrastructure financing, pertinent political risks and the downward revision in highspeed
rail plans – all point to a likely decline in the country''s construction activity, the benefit from a
recovery in demand after disastrous floods in 2011 should help the sector to build positive momentum.
The impact of the floods will be felt for a long time in Thailand and should help to provide support to the
construction sector by an increase in demand and take-up rates in the short-to-medium term. As such
during our last quarterly update, we revised upwards our forecasts for Thailand''s construction sector, with
construction real growth forecast to reach 3.2% (previously 2.2%) in 2012, up from an estimated -4.5% in
2011.
Concerns remain prominent among investors, however, as to whether the government will act to improve
flood prevention measures and ensure that a similar degree of damage will not occur again in the future.
Some fears will have been put to rest by the Thai government approved a THB400bn (US$12.6bn)
infrastructure development programme for the country’s northern region, which includes flood prevention
schemes. There is, however, still plenty of work still to done in taking further preventative steps and
convincing international investors of their merit.
Significantly, since out last quarterly update BMI has seen Chinese corporate interest in the Thai real
estate sector come 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. Although at the time of writing no
deals have been signed, BMI will certainly be keeping a close eye on developments over the coming
quarters.
Key Opportunities In The Real Estate Market
􀂃 Pattaya is proving to be an increasingly popular destination for overseas investors and local
developers. The beach holiday destination’s proximity to Bangkok and value for money are
maintaining strong demand for holiday properties and new projects in the area.
􀂃 The new Pheu Thai government is hoped to improve long-term investor sentiment, as the
political instability of the past few years dies down.
􀂃 A number of major industrial companies (like carmaker Toyota Motor) are investing great sums
in the development of new manufacturing premises. Over the long term this could increase the
quality of overall industrial space in the country.
􀂃 Pent-up demand from the floods that wracked Thailand at the end of 2012 will increase interest
in the sector at the demand end of the cycle.
Key Risks To The Current Real Estate Market
􀂃 Industrialists are voicing concerns that flood-prevention measures are not yet concrete enough to
prevent further damage to property, which may dent investor sentiment over the coming months.
􀂃 Demand for office space in Bangkok appears to have remained stagnant over 2011. No project
completions are expected in 2012.
􀂃 The improved political situation follows years of unrest, which may not completely disappear for
a months or years.

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 ... 13
Supply And Demand . 13
Rents And Yields .. 13
Table: Historic Office Rents – 2010-2011 (THB per m2/month)... 14
Table: Net Office Yields, 2011-2012 (%) . 14
Table: Terms of Office Rental Contract/Leases – Mid-2011 14
Industry Forecast Scenario ... 15
Table: Forecast Office Rents – (THB per m2/month), 2012.. 15
Table: Forecast Office Net Yields, 2008-2016 . 15
Market Analysis – Retail 16
Supply And Demand . 16
Rents And Yields .. 16
Table: Historic Retail Rents – 2010-2011 (THB per m2/month) ... 17
Table: Net Retail Yields, 2011-2012 17
Table: Terms of Retail Rental Contract/Leases – Mid-2011 17
Industry Forecast Scenario ... 18
Table: Forecast Retail Rents – (THB per m2/month), 2012 .. 18
Table: Forecast Retail Net Yields, 2008-2016 . 18
Market Analysis – Industrial . 19
Supply And Demand . 19
Rents And Yields .. 19
Table: Historic Industrial Rents – 2010-2011 (THB per m2/month) . 20
Table: Industrial Net Yields, 2011-2012 .. 20
Table: Terms of Industrial Rental Contract/Leases – Mid-2011 .. 20
Industry Forecast Scenario ... 21
Table: Forecast Industrial Rents – (THB per m2/month).. 21
Table: Forecast Industrial Net Yields, 2008-2016 ... 21
Forecast Scenarios 22
Infrastructure Report 22
Table: Thailand Construction And Infrastructure Industry Data, 2008-2016 .. 22
Table: Thailand Construction And Infrastructure Industry Data, 2013-2021 .. 23
Construction and Infrastructure Forecast Scenario .. 24
Macroeconomic Outlook ... 28
Table: Thailand - Economic Activity, 2011-2016 . 31
Real Estate Risk Reward Ratings 32
Real Estate/Construction Risk/Reward Ratings 32
Table: Real Estate/Construction Risk/Reward Ratings 32
Thailand’s Business Environment 32
Table: BMI Business And Operation Risk Ratings ... 33
Table: BMI Legal Framework Rating .. 35
Institutions ... 36
Infrastructure ... 39
Table: Labour Force Quality ... 41
Market Orientation .. 42
Table: Asia, Annual FDI Inflows, 2006-2008 .. 43
Table: Trade And Investment Ratings .. 45
Table: Top Export Destinations, 2002-2009 (US$mn) . 46
Operational Risk .. 47
Competitive Landscape 48
Company Profiles .. 49
Central Pattana (CPN) 49
Italian-Thai Development Public Company Limited (ITD) .. 51
Demographic Data . 53
Table: Thailand''s Population By Age Group, 1990-2020 (''000) .. 54
Table: Thailand''s Population By Age Group, 1990-2020 (% of total) . 55
Table: Thailand''s Key Population Ratios, 1990-2020 .. 56
Table: Thailand''s Rural And Urban Population, 1990-2020 ... 56
BMI Methodology ... 57
How We Generate Our Industry Forecasts .. 57
Construction Industry .. 58
Bank Lending ... 59
Real Estate/Construction Business Environment Rating .. 59
Table: Weighting Of Indicators 60
Sources 62Table: Historic Office Rents – 2010-2011 (THB per m2/month). 14

Table: Net Office Yields, 2011-2012 (%) . 14

Table: Terms of Office Rental Contract/Leases – Mid-2011 . 14

Table: Forecast Office Rents – (THB per m2/month), 2012. 15

Table: Forecast Office Net Yields, 2008-2016 . 15

Table: Historic Retail Rents – 2010-2011 (THB per m2/month) . 17

Table: Net Retail Yields, 2011-2012 . 17

Table: Terms of Retail Rental Contract/Leases – Mid-2011 . 17

Table: Forecast Retail Rents – (THB per m2/month), 2012 . 18

Table: Forecast Retail Net Yields, 2008-2016 . 18

Table: Historic Industrial Rents – 2010-2011 (THB per m2/month) . 20

Table: Industrial Net Yields, 2011-2012 . 20

Table: Terms of Industrial Rental Contract/Leases – Mid-2011 . 20

Table: Forecast Industrial Rents – (THB per m2/month). 21

Table: Forecast Industrial Net Yields, 2008-2016 . 21

Table: Thailand Construction And Infrastructure Industry Data, 2008-2016 . 22

Table: Thailand Construction And Infrastructure Industry Data, 2013-2021 . 23

Table: Thailand - Economic Activity, 2011-2016 . 31

Table: Real Estate/Construction Risk/Reward Ratings . 32

Table: BMI Business And Operation Risk Ratings . 33

Table: BMI Legal Framework Rating . 35

Table: Labour Force Quality . 41

Table: Asia, Annual FDI Inflows, 2006-2008 . 43

Table: Trade And Investment Ratings . 45

Table: Top Export Destinations, 2002-2009 (US$mn) . 46

Table: Thailand''s Population By Age Group, 1990-2020 (''000) . 54

Table: Thailand''s Population By Age Group, 1990-2020 (% of total) . 55

Table: Thailand''s Key Population Ratios, 1990-2020 . 56

Table: Thailand''s Rural And Urban Population, 1990-2020 . 56

Table: Weighting Of Indicators. 60

Thailand Real Estate Report Q3 2012

Published By: Business Monitor International

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