Because of tourism, the real estate industry of Bangkok never stopped moving forward. In fact, new establishments are constructed each year from condominium in Thong Lor to serviced apartment Sukhumvit and there is no end in sight. For this year, many are wondering about the future of real estate in the capital city of Thailand.
According to data, over 300,000 condominiums units have been constructed in Bangkok since 2013 and retail space has expanded by another 1.3 million square meters. Office space, on the other hand, occupies almost 800,000 square meters.
The real estate sector of the capital city has seen a huge increase in its market for the past half decade. Aside from those enumerated above, there is also a considerable growth in the sectors of logistics as well as hospitality.
For this year, the main drivers for the growth are no longer the same thus leading players in the industry are trying to keep up with these new challenges. JLL, a property consultant firm, published a number of new trends that will impact the real estate market of Bangkok this 2018.
JLL’s head of research, Andrew Gulbrandson, said that there is an increase in the costs of land and it will continue to do so thus the market will be facing a tough challenger. Based on the recent years, the increase ranges between 10 and 15 per cent annually thus developers are trying to change their directions.
The fact is that it is no longer practical, on a financial standpoint, to purchase new land within the city under the freehold system. These lands are usually intended for retail use, office or hospitality and this applies to almost everyone except for a very few exceptions. In turn, investors are now looking for other venues such as acquiring long-term leases in order to construct establishment for commercial and hospitality use.
Mr. Gulbrandson said that the increase in the land costs is not the only challenge developers are facing but strong competition is another. Developers are now entering joint ventures in order to construct serviced apartment Sukhumvit and most of their partners are foreign investors.