- The accumulated supply of Bangkok condominiums included 652,081 units as of 1H 2021; which are 6,293 units from 20 projects were launched during 1H 2021. The new supply in 1H 2021 decreased by 38.7% compared with the new supply in 1H 2020.
- The number of newly launched condominium located in the suburbs Bangkok at 66% of the total new supply launched in the first Half of 2021. While the City Fringe area 29% of the total, and the Central Business District at 5%, respectively.
- Only 2,333 units were sold from the new supply during the first half of this year from 6,293 units, representing a 37.1% sales rate – and reflecting a 13.3% increase in sales rate when compared to the same period in the previous year.
- The asking price of a condominium in the Central Business District is 240,609 baht per sq.m., decreasing by 4.3% from the second half of 2020. Condominiums in the City Fringe area is 116,225 baht per sq.m., decreasing by 5.9% from the second half of 2020 and condominiums in the suburbs of Bangkok is 64,390 baht per sq.m., decreasing by 6.6% from the second half of 2020.
The overall condominium market in the first half of 2021 remained contracted, compared to the second half of 2020. The impacts of the Covid-19 Virus continued to spread throughout the first half of 2021 to the current new wave of infections in Bangkok and vicinity areas. As a result, the purchasing power for condominiums from Thai buyers is still declining and foreign buyers still not return yet. Major developers had to postponed or delay the launches of new condominium projects to the fourth quarter of 2021 while turned their focus to the development of low-rise projects to increasingly cater to the buyer group with real demand for residences. Amidst an unfavourable situation, the management of vaccinations against Covid-19 marks an important factor that can reduce and control future outbreaks and bring the economy, including the real estate market, back to normal once again.
- The housing market is priced at 10 million baht and up that the luxury home market remains a relatively small segment with limited demand.
- The land allocation permits for houses in the price level of 10 million baht or more In the first five months of this year, there were 578 land allocation permits.
- There are 224 housing projects that have units available for sales. These projects have a total units of 20,018 units, of which approximately 13,276 units are being sold out of 20,018 units, representing the sold rate of 66%.
- If classified by pricing level, it has been found demand that houses with a selling price level between 10 to 20 million baht have the highest accumulated number of units sold, at 7,218 houses, with a sales rate of 61%. This is followed by houses with sales prices between 21 and 30 million baht and 31 and 40 million baht, with demand at 2,612 units and 1,871 units, respectively. or a sales rate of 77% and 73%, respectively.
- There was a total of 1,610 new units sold during the first half of 2021, which represents a relatively high number of units sold compared to the previous years where the average number of new units sold was only about 2,500 units per year.
The overall luxury housing market, with prices, range from 10 million baht or above in the first half of 2021, has continued to maintain a steady demand. Listed developers had turned their development focus to the low-rise market for detached houses, semi-detached houses and townhouses, despite a sharp drop in the Bangkok condominium market. Work from home trends has been driven by necessity. COVID-19 has changed the expectation of buyers as a need for larger homes or extra rooms for working spaces. This also pushes up the demand towards the Bangkok suburbs areas where the options are more affordable.
- In the first half of 2021, the retail industry continues to be negatively impacted by the spread of COVID-19, this situation severely affected the shopping centre. Sales at some stores in the centre have dropped more than 50% since last year.
- The total retail supply is approximately 2.5 million square meters, 57% are in the central business district, and 43% are in the Fringe area.
- Thaniya Plaza renovation has been completed and reopened with a new supply of 8,500 square meters. As for the extension building, another 3,500 square meters is still being renovated.
- The occupancy rate in CBD and Fringe retail space especially department stores by major developers still relatively high at the first half of 2021 about 90%. This is mainly because landlords still reduced rental fees to help tenants during the COVID-19 situation. Landlords cut rents by 30% -70% in the third quarter of 2020 to compensate shops during department store closures.
The COVID-19 pandemic has reset the retail challenge. The most successful retailers are those that connect with consumers in new ways through various digital channels and in-store technology. In the first half of 2021, the retail industry continues to be negatively impacted by the spread of COVID-19, the landlords still expect to retain rental reduction programs for tenants who got heavily effect from third wave infection in Bangkok.
- Early Sukhumvit area comprises the majority of the luxury hotel supply with 39% of the total supply followed by Lumpini (24%), Riverside (17%), and Silom/Sathorn (14%).
- The average occupancy rate of luxury hotels in Bangkok dropped further to 20% in the first half of 2021. After the second wave of the Covid-19 outbreak at the beginning of the year, the tourism sector started a slow recovery with occupancy rates from 18% in January to 27% in March. The more severe third wave in April resulted in occupancy rates plummeting to 16% and 17% in May and June, respectively.
- The Average Daily Rate (ADR) of luxury hotels fell by 36% YoY to THB 3,072 as those remaining hotels open, competed with discounts and promotions to attract a weak domestic market.
- No new luxury hotels opened in Bangkok in the first half of 2021. As uncertainty continues on the border reopening date, and the pace of recovery in the number of international arrivals, hotels with plans to open in 2021 such as Ascott Embassy Sathorn Bangkok (361 rooms), Ascott Thonglor Bangkok (445 rooms), and The Standard hotel at Mahanakhon (154 rooms) will see delays.
Thailand’s worst wave of infections began in April, and reached its peak in June with new restrictions enforced for Bangkok and other nine provinces, taking effect from June 28 for at least 30 days. With no end in sight to the pandemic and the resume of international cross-border tourism activity, the pandemic will continue to be an obstacle to the performance of the Thai hotel industry in 2021 and beyond.
- Total supply of office space in Bangkok increased by 130,500 sq m to reach 5.53 million sq m in H1 2021, representing a 2.4% growth rate from the previous half. Four new buildings were completed, adding 22,500 sq m to the CBD and 108,000 sq m to non-CBD areas. Meanwhile, no stock was withdrawn from the market.
- In the second half of 2021, it is projected that another 175,800 sq m of office space will enter the market as 9 new projects are completed. Around 60% of the anticipated new supply will be in the CBD. The Bangkok office market supply will grow by 1.67 million square meters in total or by an average of 302,000 sq.m. per year (excluding withdrawals).
- The market occupancy rate dropped by 2.1% points to 83.0%. All grade segments continued to underperform their long-term averages. The occupancy rate dropped by 0.3% points for grade A, 2.5% points for grade B, and 2.6% points for grade C.
The average asking rent dropped from its level in H2 2020, falling by 6 baht to 791 baht per sq m per month. In some leasing deals, the effective rate is up to 30% lower than the asking rent. The average asking rent is now down 1.3% yearly, far below the positive 3.8% average annual growth rate experienced over the past decade.
The Bangkok Office market continued to move away from its cyclical peak as occupancies fell and asking rents declined for most sub-markets. The tenants’ market that we saw emerge in the beginning of 2021 was strengthened as the gap between supply and demand continued to grow. Even if demand returns to pre-COVID levels, tenants will likely still have strong bargaining power given the relatively large supply pipeline, especially during the upcoming 3 years.