INTERVIEW: THAI REAL ESTATE
Not everybody can win in Thai real estate: Savills Discounts and promos played a major part in keeping the market steady.
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ike its neighboring countries in Southeast Asia, Thailand has not completely lifted some of its pandemic-related restrictions, and many of its expat occupiers have yet to make a return to their properties. Overall, however, Thailand has been faring better as landlords were reported to have given remarkable discounts to tenants. For residential offerings, promos have been offered and it was observed that landed housing has been on the rise in the past few months. Speaking with Savills Bangkok Thailand Head of Professional Services Jeremy O’Sullivan, he said that the country has an abundance of space in almost all sectors of the real estate market. This helped the industry maintain its prices throughout the past year and is continuing to offer similar packages this 2021. The challenge for landlords in the commercial sector, however, is how to compete with newly launched spaces that are offered at the same price point as older listings. “It can be very sensitive in Bangkok because we do have so much choice, not everybody can win,” he said. “There’s going to be a huge amount of competition in the office market. We think that rates will continue trending downward, because older office buildings are going to have to offer benefits for tenants looking to remain or to attract new tenants,” he added. ‘Wait and see’ O’Sullivan said that Savills saw an average of 4% drop in occupier prices in the past year. With new cases of COVID-19 hitting Bangkok which may continue to worry businesses in the coming months, he said that a return to office scenario may be possible by Q4 of 2021. “We saw approximately 5 percentage point fall off during the pandemic in 2020, and we do expect occupancy rates to continue trending downwards over the next few years,” he said. “Some organizations found that it’s preferable for them to remain in office and to keep working on a Team A and Team B basis. Overall, the market has been very mixed, but it’s possible that we may see a bigger return to office in Q4,” he added. It was observed that there has been a drop in leasing activity in Bangkok. Although space remains available in the office market, occupiers and tenants are taking a more cautious approach as to when they will make their move to new office spaces. “Most occupiers are taking a ‘wait and see’ approach at the moment. We’ve seen a very sharp drop in general leasing activity where we had been expecting tenants to be 38
REAL ESTATE ASIA | Q1 2021
In Bangkok we do have so much choice, not everybody can win -Savills Bangkok Thailand Head of Professional Services Jeremy O’Sullivan
lining up or move into a new office space. In general, we’ve seen this greatly paused across the Bangkok market,” he said.
Thai people have a strong culture of retail. In provincial areas and major cities, retail malls are utilised as a social gathering place. Retail stores will remain important
Retail keeps its stronghold Bangkok is widely known as a fashion city in Asia. According to O’Sullivan, this appeal has not ceased during the pandemic, which has helped to maintain leasing activity and demand for retail space. International brands have continued to plan for their market entry strategies and remain confident on the success of Thailand’s long-term outlook.Whilst retail did drop in activity, e-commerce, in particular, helped stabilize this sector by contributing an increase of 35% in sales last year. “Thai people have a very strong culture of retail. In provincial areas, Bangkok, and in every major city, retail malls are utilised as a social gathering place. They are really critical in cities. We do expect that retail stores ‘bricks and mortar’ will remain important to anybody entering this market. Investing in bricks and mortar for newcomers into the market or those expanding will continue to be important.” he said. “Like every other developing country and those more developed markets, e-commerce is entering and it’s
