Bangkok’s real estate market has witnessed tremendous growth over the last five years. Since 2013, more than 300,000 new condo units have been launched, 1.3 million square metres of new retail space has opened and nearly 800,000 sqm of new office space has completed, not to mention healthy growth in the hospitality and logistics sectors.
In 2018, the underlying drivers of the recent growth cycle are changing and creating new challenges for the market’s leading players. Property consultancy JLL reveals some of the trends that are shaping the Bangkok real estate market this year.
Andrew Gulbrandson, Head of Research at JLL, says “Rapidly rising land costs continue to represent a significant challenge for the market today. The recent annual increases around the market of 10-15% per year are pushing developers in new directions.”
With only a handful of exceptions, it is no longer financially feasible to acquire new freehold land in the city centre for office, hospitality or retail uses. As a result, many investors are seeking opportunities to secure long-term leases for new commercial and hospitality development.
“Asides from rising land costs, there are numerous other challenges facing investors in certain market sectors, one of which is intensifying competition. To ensure success, and indeed the happiness of shareholders in many cases, market leaders are taking a variety of steps as they pursue growth objectives,” says Mr. Gulbrandson.
He explains that while the trend of residential developers moving to higher priced products that target both local and foreign buyers with higher liquidity exemplifies the case well, the most prolific growth strategy being adopted by local players is entering into joint venture (JV) partnerships, in many…