Real estate market experts believe that Thailand’s economic development will enable it to become a base for an increasing number of offices of foreign companies seeking to invest in the development of the ASEAN region, in anticipation of strong growth expected in 2015.
CB Richard Ellis (Thailand) Managing Director Alisawasa Pattanathabutr told The Nation that after the 1997 financial crisis, demand for office space in the country grew very slowly—by less than 5% per year. However, demand is now increasing by more than 10% annually and is expected to reach 100,000 square meters this year. This surge is driven by the country’s economic growth and the need for headquarters of foreign investors operating not only in Thailand but also in other Asian countries, particularly Myanmar.
She added that although Thailand experienced severe flooding last year, most investors maintained their positions and even expanded their presence in the country, as evidenced by new land purchase contracts in industrial zones. Some are simply avoiding flood-prone areas but are not willing to leave the country due to its strong economic potential.
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Several promising industries in ASEAN countries such as Myanmar, Cambodia, and Laos will also need to use Thailand as a base for their headquarters, primarily due to its superior infrastructure.
For this reason, Alisawasa believes that the office real estate market will experience strong growth over the next two years, making it an opportune time for developers to expand their investments in this sector.
Suphin Mechuchep, Managing Director of Jones Lang LaSalle (Thailand), noted that the office real estate market has shifted in favor of existing landowners, creating new opportunities for further development as rental prices have recovered from the crisis and are showing steady growth. Demand had declined in recent years due to political instability and the global financial crisis but has rebounded over the past few quarters with renewed confidence.
Relatively low rental rates in Thailand previously allowed property owners to upgrade and expand space in prime locations. However, such opportunities are becoming limited and may turn into a shortage in the coming years.
Earlier, Colliers International Thailand also stated that Thailand is likely to become a base for offices of foreign companies expanding their investments both in the Kingdom and in developing ASEAN countries. This is due to Thailand’s relatively high level of socio-economic development compared to other Southeast Asian nations.
Source: The Nation, July 11, 2012