Thailand real estate market trends forecast for 2023 from CBRE Thailand

Thailand starts 2023 with a positive outlook from both the economic and the real estate sector as a whole. Leading international real estate consultant CBRE Thailand highlights the key trends to look out for in the residential, office, retail, industrial, logistics and hotel segments in Thailand. CBRE Thailand Development Director Rungrath Weeraparkkaroon said: "The year 2023 has started with much more optimism than in previous years, on the back of significant improvements in sentiment in the last quarter of 2022. Individual and corporate clients have more confidence in the outlook for the year ahead. People have a clearer idea of how they will manage their lives and work, and real estate developers and investors have more confidence that their projects are directly responding to the new demands of their clients. Stakeholders have taken the time to understand the evolving trends in residential and commercial real estate and have adapted by applying appropriate strategies and policies for their businesses. "

"The Bank of Thailand forecasts GDP growth of 3.6% in 2023, up from 3.2% in 2022. This projection will depend heavily on the number of tourists and the performance of the export industry. Also important is how the government balances the need to reduce fiscal stimulus without impacting overall consumption growth while maintaining high levels of personal debt," added Ms. Chotika Tungsirisurp, Head of Research and Consulting at CBRE Thailand.

The most positive trend, however, is that we are no longer preoccupied or distracted by COVID-19; instead, we enter the year knowing that we have weathered the storm and now approach life with different expectations about where and how we live, work and vacation.

Housing

The residential sector in downtown Bangkok had another quiet year in 2022, with approximately 95% of new units located in the mid-neighborhood and suburbs and targeting the low to medium price bracket. Home buyers favor low rise homes, preferring lower density, more spacious and comfortable spaces. This year, developers will be even more active in launching low rise projects that will meet the actual real estate needs in the country. In the downtown apartment market, CBRE expects developers to continue to focus on selling ready-to-move-in units before assessing the launch potential of new projects in downtown Bangkok in the second half of the year. Downtown may see a gradual recovery in terms of new starts, but it will take time, and we may still see relatively few new downtown projects in 2023. CBRE expects developers to continue to launch projects in the mid-neighborhood and suburban apartment market, and to watch the trend toward combining residential and commercial elements in mixed-use projects. Ms. Artitaya Kasemlawan, Head of Residential Sales - Project, CBRE Thailand, commented, "End consumers have clear expectations and requirements that developers must meet in order to generate sales. Buyers continue to place a high value on space, functionality, privacy, green space, wellbeing and technology. Developers of luxury residential projects and super-luxury projects will need to provide adaptive spaces to allow multiple family members to work from home, space for multi-generational living under one roof, and provide enough parking spaces with electric vehicle charging capabilities.

"In terms of the apartment resale market, buyers are willing to buy older, larger apartments that need renovations, as they often offer square footage not typically found in newer projects. These apartments are usually sold at a lower price per square meter, allowing buyers to invest in renovations to suit their family's needs. Thai demand for overseas real estate continues to prefer the UK and Australia, often due to educational purposes for families, but also for investment, family welfare and lifestyle satisfaction in places such as Japan and the Maldives," added Ms. Praphinlia Phuenkhuangkan, Head of Residential Sales - Ad Hoc, CBRE Thailand.

The key trends in the review:

• Developers are mainly focusing on launching new projects with low development
• The priority is to release inventory rather than launch new apartments in the city center
• Domestic demand remains a key focus for developers

Office sector

The trend for most of 2022 has been for domestic companies to renew leases, particularly for large space tenants. However, multinational companies (MNCs) in Bangkok have made significant strides in reviewing their future office needs and some have already made the decision to relocate to new premium Grade A office space. With the significant increase in international standards and green office buildings, MCCs that have developed new work policies, especially hybrid working, are seizing the opportunity to improve the quality of their workspace to meet corporate requirements to go green, retain and attract talent, and provide a work environment that will incentivize time spent in the office. CBRE expects more leasing activity in 2023, when Thai companies will be ready to move out of buildings they have occupied for more than 20 years to embrace hybrid operations in office buildings setting new standards for Bangkok. "Engaging with employees and implementing a work strategy will be key to future job acceptance. That said, increased set-up costs will also be an important factor for tenants, and owners will be keen to offer competitive rental packages in an attempt to persuade large businesses to relocate. These new developments will include individual flexible workspaces and offer a wide range of services to meet the needs of the modern workplace, including wellbeing and lifestyle amenities," added Mr. Sarut Weerakul, Director of Office Properties, CBRE Thailand.

The key trends in the survey:

• The completion of new international standard buildings will lead to more relocation opportunities
• Landlords will offer competitive rental packages to attract tenants
• The consideration of green and hybrid workplaces will have a significant impact on relocation decisions

Retail Trade

The retail sector has seen a greater degree of landlord-tenant collaboration in recent years than most other sectors. This level of understanding benefits both parties as the sector never stops evolving. While the importance of embracing technology, especially in the online sphere, has never been more evident, CBRE expects customers to continue to demonstrate the importance of physical stores and offline shopping. Six major retail development projects are currently under construction and seven more have been announced, but the trend to watch will be the development of smaller retail developments that fit the needs and lifestyles of suburban residents. Ms. Jariya Tumtrongkitkul, Head of Retail at CBRE Thailand, commented, "While the importance of online shopping, payments and delivery will continue to grow, landlords will continue to invest in their physical properties to attract visitors. While online commerce offers convenience and offline commerce offers experience, both aspects are equally important and require seamless integration. "

The key trends in the review:

• Renovating old centers to create a more modern environment
• Owners and retailers will find new ways to cooperate for mutual benefit
• In-store promotions, on-site events and new retail establishments to attract shoppers

Industry and Logistics

Demand for industrial land will continue in 2023 as developers rush to expand existing industrial zones and create new ones in line with demand driven by the continuation of the China Plus One policy. Renewed and updated incentives from BOI will be needed to keep pace with competing countries in the region in attracting foreign direct investment. Thanks to continued investment in key infrastructure