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Bangkok : Prolonged political conflicts weigh on property sector - Q1 2014

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Thailand’s economy slowed for the fourth consecutive quarter in Q4 2013, growing 0.6% year-on-year (y-o-y), down from the 2.7% growth in Q3. The political conflicts, sluggish exports and weakened consumer spending were the main factors hindering growth in Q4, which is seasonally a quarter of strong growth. The Bank of Thailand (BOT) downgraded the 2014 GDP growth forecast in March from 3.0% to 2.7%, with the expectation that the political impasse will likely continue throughout H1 2014.

The ongoing political conflicts have started to weigh on certain business segments. Office demand in the Central Business District (CBD) weakened slightly in Q1, causing a decline in occupancy to 90.5% from 91.9% in Q4 2013 (Figure 1). Notwithstanding, there was still strong demand for prime office space among larger corporates.This helped to lift overall office rental levels by 1.4% quarter-on-quarter (q-o-q) to THB710 per sq m per month. While the political activities have yet to impact the performance of the office market, the lack of an official government has begun to affect corporate sentiment.

Source : DTZ (Groupe UGL)