CBRE, a leading international property consultant, witnessed the real estate market in 2021 has seen a series of interesting and unprecedented events in many sectors as another difficult year comes to an end.
New Bangkok condominium launches in downtown area have slowed down to a halt while low-rise housing demand surges. Retail market faced the lowest consumer confidence index in years while the hotel sector got creative at its adaption to the COVID situation. The office market is heavily impacted by office tenants shift in demand for space and relocation.
Mr. Rathawat Kuvijitrsuwan, Head of Research and Consulting, CBRE Thailand commented, “For the first time, the downtown Bangkok condominium market did not see any new project launches for two consecutive quarters in Q2 and Q3 of this year. While the midtown and suburban market has seen some new launches, it is far from its usual level of activities. The total number of condominium units launched for the first nine months of this year only accounted for 11,760 units, a 72% drop from 2019 level and 37% drop from 2020 level.”
With the necessity for more space that is flexible and adaptable to a variety of requirements, lower-density community, the demand for and appeal of a low-rise housing project has increased this year. This increase in demand resulted in some developers not having enough inventory to meet the needs of the buyers. Developing a new project and adapting the design to meet the new buyer’s preference could take at least a year to launch which could be longer if developers also need to acquire land.
For Retail, back in August 2021, the consumer confidence index fell to its lowest point since 1998 because of the surge in COVID cases and the negative financial impact, business interruptions and no sign of significant improvement in the market. The uncertain situation forced a fast and less costly response to the market from many retailers. Thus, smaller format, flexible retail such as food trucks, cloud kitchens and pop-up stores could be seen popping up across Bangkok.
On the other hand, the hotel industry could stake a claim for being the most creative in terms of adapting to the restrictions and changes in customer behavior, turning from alternative state quarantine (ASQ) to Test-and-Go operations. Shifting to an almost purely domestic-driven market, staycations, promotions and packages catered to Thais have been key as hotels try to claw back occupancy rates. According to STR, the average daily rate (ADR) of hotels in Bangkok went below the THB 2,000 threshold for the first time in more than a decade in March and again during June to September.
“As businesses have not been able to operate normally for almost two years, the office market has been heavily impacted with contractions and relocations of office tenants, even more than in 2020. The net take-up of office space has been negative for three consecutive quarters this year, accumulating a total of -80,026 square meters. We have not seen a negative annual net take-up for the Bangkok office market since the 1998 financial crisis.”
“In 2020, we faced another wave of COVID-19 before the end-of-year holidays. This year, concern over the Omicron strain has been on the rise, prompting the government and business alike to prepare to tackle new challenges. How the real estate market will respond to this uncertainty will highly depend on the actions the government will take to handle the situation and how the market sentiment will respond to the COVID-19 situation,” Mr. Rathawat concluded.