Commercial Investment Real Estate Spring 2022 | Page 11

WORLDVIEW : THAILAND

Office Industrial Retail Multifamily
4Q2021 Cap Rates
The Bank of Thailand Key Rate in CBD 6-8 %
outside CBD 5-7 % 5-7 % 6-7 % 3-4 % 0.5 %
Major Economic Indicators
Annual Inflation Rate
5.28 % in February 2022
Unemployment
1.6 % in 4Q2021
GDP 1.6 %
Growth in 2021
2H2021 Vacancy Rates
Office
9.2 %
Bangkok Region
Industrial
10.6 %
Retail
7 %
2H2021 Rental Rates Bangkok Region ($/ sf )
Office $ 2.40
Industrial $ 0.47
Retail $ 10.00
( -2.75 % QOQ ) ( -6.26 % HOH ) ( -9.78 % HOH )
Inventory in 2H2021 Office Industrial Retail Multifamily
101.43 million sf
44.41 million sf
9.87 million sf
9,586 units
Data provided by Cushman & Wakefield and Thailand ’ s Association for Real Estate Affairs

Thailand , the world ’ s 24th largest economy by gross domestic product , had an expectedly turbulent 2021 . Facing myriad challenges in the second year of COVID-19 , the Southeast Asian nation saw overall GDP contract by 0.9 percent in 3Q2021 , before rebounding with an expansion of 1.8 percent in 4Q2021 . ( Overall , for the year , Thailand ’ s economy grew by 1.6 percent .) Its primary commercial real estate sectors also experienced an up-and-down 2021 .

Both office and retail sectors saw vacancies spike in the first half of the year before ticking downward to levels near those seen in 2020 . Industrial assets , meanwhile , experienced a bounce-back year , with vacancies dropping to 10.56 percent in 2H2021 from a COVID-19-fueled high of 14.33 percent in 2H2020 . Perhaps the biggest reason for optimism in Thailand ’ s industrial CRE sector is the continued growth in average selling price , which reached $ 11.61 per sf , a 7.87 percent year-over-year increase .
Office , meanwhile , faces an uncertain future . The shakeout from the pandemic is expected to take years . Cushman & Wakefield ’ s economic report on the sector says , “ We have observed a rise in enquiries from tenants looking to move from traditional office space to flex space , seeking capex savings , as well as growing leasing enquiries for fully or partially fitted out space . We expect to see overall office asking rents to drop slightly further , with the leasing market continuing to be tenant favorable .”
Retail is also expected to face an extended recovery , due partly to the country ’ s reliance on international tourism . “ Thailand reopened its borders for quarantine-free access to fully vaccinated travelers from 63 countries and territories [ in November 2021 ],” the Cushman & Wakefield report states . “ But with tight controls remaining on international tourism , the retail market will need to be supported by higher domestic consumption of retail goods and services .”
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COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE SPRING 2022