Thailand’s economic growth fell for the third consecutive quarter in Q3 to 2.7% year-on-year (y-o-y) from 2.9% y-o-y in Q2. Weak domestic consumption and exports were some of the factors that led to the lacklustre performance. Amid the resurfacing of domestic political conflicts and slow pace of recovery in key economic sectors, the Bank of Thailand (BOT) in November downgraded the growth forecast to 3.0% from 3.7%. Similarly, the growth forecast for 2014 was lowered to 4.0% from 4.8%.
The lack of new office space continued to drive rental and occupancy levels upwards. Net absorption levels in Q4 surged by 32,378 sq m lifting cumulative absorption levels for 2013 to 57,940 sq m. Rental levels rose 1.7% quarter-on-quarter (q-o-q) to THB700 per sq m and are expected to maintain a sustained level of growth at least until new supply comes onboard at the end of 2014.
The fourth quarter was generally quiet for the Bangkok retail sector as there was no major new supply, bringing total downtown completions for 2013 to a slightly lower 50,000 sq m compared to 85,905 sq m in 2012. The lack of significant mall completions has limited the amount of large leasing tenancies this year. Nonetheless, in light of the expected completion of a number of prominent new malls in 2014, including Central Embassy, EmQuartier and MahaNakhon Cube, net absorption is likely to pick up pace correspondingly.
The Bangkok Central Business District (CBD) condominium market saw a sharp rise in the number of launches in Q4, which totalled 3,000 units. This lifted total unit launches for 2013 to over 10,000 units – a record year for the CBD. Launch activity was upbeat on the back of consistent demand from domestic purchasers and a rising number of foreign investors. The lack of prime sites has ignited a demand surge for top quality products, driving super luxury launch prices from THB193,000 per sq m in Q1 to THB225,000 in Q4.
Source : DTZ (Groupe UGL)