Written by John Guzman
Expats in Thailand were not deterred by the political turmoil in the country that shut Bangkok down, where most continue to remain positive that the political unrest will end soon. On March 18, Bangkok state of emergency was lifted and business was back to usual for most foreigners.
On April 2, 2014, Bangkok Post reported foreign investors looking for equities on real estate are back on track. At least eight foreign investor groups from countries such as Korea, Singapore and Hong Kong approached property consultant Colliers International Thailand for investment opportunities. These new developments in the Thai property market would only increase further the cost of doing business in the Southeast Asian country.
Since the economic boom of Thailand fuelled by the massive influx of foreign visitors, real estate market surged simultaneously, as more foreign companies wanted to tap the growing market at the time. Many foreigners who came as tourists felt attachment to the country and stayed since.
Recently and despite the political turmoil, Bangkok Business Brief mentioned the demand for serviced apartments in 2013 remained unchanged in most areas of Bangkok, according to the real estate adviser CBRE Thailand. A testament reflecting Thailand remains convenient for foreigners working and living in despite the odds. It is worth to mention, as of this year, foreigners in the country made up almost 95 percent of the total demand on rental units in premium locations, as reported by a Financial Times article.
In another development, office space vacancy, in the capital Bangkok, fell below 10 percent for the first time in 20 years. By the end of 2013, aggregate office space in Bangkok stood at 8.1 million square meters and the occupancy rate was as high as 90.4 percent. All locations and all grades have seen improvement in occupancy. Rent cost rose between 5 to 9 percent year-on-year, depending on the quality and location of the building, according to James Pitchon of CBRE Research and Consulting in a Pattaya Mail report.
The high demand of office space brings in foreigners limited bargaining power. Thus, rent prices in Bangkok shall only increase in the coming years, assuming political issues come to an end. However, as seen in the past few months, these issues do not seem to represent a big factor for foreigners who continue to stay in the country. The only obstacle for small to medium foreign enterprises would then only be the higher cost. On the other hand, benefits are numerous, as the market is well-developed and quality is almost guaranteed. Transportation infrastructure in Bangkok is developed to some extent, compared to its peers, although still needs improvement. Renting means foreigners have a constant option to find something better. For instance, the political unrest that started late last year made many foreigners move out of areas neighbouring protests.
Thailand property market should not only be concentrated in the capital, as a significant number of foreign companies, mostly manufacturing companies, are housed in provinces outside Bangkok, specifically in Chiang Mai, Khon Kaen, and Chon Buri. In these provinces and by the end of 2013, available office spaces still remained limited, while demand continued to be strong. This lack of supply would be a major obstacle for foreign companies, who are looking to expand their business in the country.
–Edited by Mohamed P.Hassan