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Thailand is experiencing a moderate rebound in growth this year with real GDP growth of 3.0%, up from -3.8% in 2009 due to an expected pick-up in external demand, continued robust government spending and improving domestic consumer spending. However the Thai economy still has problems related both to the global financial crisis, which has seen exports shrink dramatically, and to the ongoing political uncertainty, which threatens to flare into open conflict and violence at any time. Both these factors have contributed to the collapse of the tourist industry, with hotels in Bangkok reporting the most difficult trading in a lifetime. Following is information on the Thailand commercial property market and the comprehensive services provided by Healy Consultants:

Political turmoil in Thailand, along with the reduced confidence in the Thailand economic outlook is leading to a decline in the Thailand commercial property market. Political instability reduces the confidence of foreign investors, putting extra pressure on the property market.

While restrictions apply to foreign ownership of real estate, foreigners are able to invest in Thailand commercial property and residential property.

With the average rent for prime office space in the central business district of Bangkok remaining just slightly more than Bt740 (US$22) per square metre per month (psm), office rentals in Bangkok are among the lowest in the region, says CB Richard Ellis Thailand.

“We believe that once the business confidence is restored, then new demand will exceed increased supply. The market has had close to 300,000 square metres of new take up annually since 2000, only falling in 2006 and 2007. There is 520,000 square metres of new supply from 2007-2009, or about 173,000 square metres a year. Demand could exceed supply and rents will start to grow again,” said Nithipat Tongpun, Director and Head of Office and Retail Services at CB Richard Ellis Thailand.

At the end of 2009, vacancy rates increased to 13.3% and 10.19% for Grade A and Grade B offices, respectively. Vacancy rates of Grade C offices dropped from 11.84% to 10.91%. Further pressure on vacancy rates will also be felt with the release of new supply amounting to almost 5% of the grade A stock which is due to come on stream in 2010.

Healy Consultants assists international entrepreneurs and investors maintain peace of mind over their investment by providing efficient property management services relevant to the Thailand commercial property market. Such services include:

Organising property insurance for the commercial premises to secure structure and contents of the client's new asset.

Appointing and supervising a reliable agent to manage the process of finding tenants.

Implementing the required security measures to protect the premises, employees, company hardware and IT requirements.

Project managing any property maintenance requirements.

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The most recent DTZ's 2010 Global Occupancy Cost Report emphasizes that Thailand is one of the best places to establish a company in regards to occupancy cost. Being the second cheapest place in the Asia Pacific Region with a total occupancy cost of US$23.20 per sq ft per annum; Thailand offers a great way to establish an office in Asia, while saving money in the same time.

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According to the Knight Frank Q1 2010 Bangkok Office Market Report, office rents declined by 1.48% during 2009. This could be encouraging for investors and may indicate an improving rental market. However in the immediate term, levels of new demand stemming from relocation and expansions continues to fall as business confidence suffers from issues related to politics.

The outlook for the Thai office market is as uncertain as the outlook for the Thai economy. Reports that domestic consumption is up and exports are recovering are encouraging and should these trends continue unabated then we can expect to see demand for office space recover by the second half of the year. This however comes with the usual caveat so long as there is no further political disruption or any further weakening in the global economy. In the meantime, soft market conditions will continue and new supply entering the market will put further pressure on rents as occupancies continue to slide.

For further information on Thailand commercial property market, please contact us at our Singapore office at (+65) 67350120 or email us at email@healyconsultants.com