The real estate market in Thailand is becoming one of selective opportunity. In the residential segment, international investors are still active in the high-end market and healthy uptake is evident in the mid range. However, the affordable-housing segment is suffering as domestic buyers continue to be weighed down by high levels of debt. On the commercial side, high occupancy rates in existing properties will be balanced by large blocks of capacity coming on-stream in the near future. Retail offerings, meanwhile, have hit a plateau and the pipeline for new leasable space is small. In all property categories, resilience is seen in assets that are located near related infrastructure, such as transport routes and schools, as well as those that offer unique features.

Residential Supply & Demand

By some metrics, 2017 was an excellent year for the residential segment. Rising prices continue to reflect the attractiveness of the capital, with the DD property Price Index hitting 205 in the fourth quarter of the year, up from 182 in the final months of 2016. Indeed, global real estate consultancy Knight Frank reported that the average selling price for new condominiums of all grades in Bangkok rose by 6% in 2017 to BT153,220 ($4440) per sq metre. More than 62,750 new condo units hit the market in the capital that year, up 19% over 2016, while the take-up rate rose two percentage points to 75.8%. At the end of 2017 the total condo stock in Bangkok reached 538,920 – up 13.2%.

According to a fourth quarter 2017 report by Colliers, most condominium units are being built near mass-transit lines that are under construction (see Construction overview), and are priced in the range of BT50,000-120,000 ($1450-3470) per sq metre. In terms of demand, units below BT200,000 ($5790) per sq metre and those priced above saw similar rates of uptake, at 58% and 61%, respectively.

In late 2017 Nexus Research undertook an analysis of price and new supply in various areas of the capital and its outskirts, noting that price increases for the year were most pronounced in the Pathumwan-Ratchathewi area, where they rose by 16%. That location also recorded the highest average price of BT234,000 ($6770) per sq metre. The central areas seeing the strongest growth in terms of unit supply are Phra Khanong-Suan Luang, Phaya Thai-Ratchadaphisek and Thon Buri-Petchkasem. Certain projects were selling out quickly in the fourth quarter of 2017, such as The Line Sathorn and Noble Ambience on Sukhumvit Road; CELES Asoke sold 80% of its units on the first day of pre-sales in September 2017.

The outlook for the residential segment remains strong. The Real Estate Information Centre forecasts growth of 3.4% in the nationwide housing supply in 2018 to 265,550 new units, with a rise of 5.9% in the number of condominiums. Growth in the housing supply of Greater Bangkok, specifically, is estimated at 2.8% to equal 117,100 units coming on-line, with the number of condos to increase by 6%.

Segment Trends

Alongside rising supply and healthy rates of uptake, some concerns have been building in the segment. Demand for homes is being constrained by the relatively low purchasing power of local property-seekers, with household debt equalling 79% of GDP in 2016 and 78% at the end of 2017, according to the Bank of Thailand (BOT). Colliers reported that unsold units in Bangkok totalled about 45,000 at the end of 2017.

“In 2013 the Bangkok condo market was red hot and as a result, developers incorrectly assumed the provincial markets would also offer suitable investment opportunities – which in fact they did not,” Andrew Gulbrandson, head of research at JLL Thailand, told OBG. Although the lower-end condo segment proved to be lucrative for several years, the accumulation of household debt caused demand in that category to shrink and forced developers to migrate up market to the BT100,000-200,000 ($2890-5790) per-sq-metre price range. “With many developers moving into higher priced segments, it is becoming increasingly challenging to launch a successful project,” Gulbrandson added.

Having so many choices is perhaps one factor that has led buyers to become more selective. While there have been exceptions, it is no longer the norm for buildings to sell out in just a few days, and sales and administrative costs are on the rise, which is indicative of prolonged marketing efforts. According to Nathavut Shivaruchiwong, analyst at Deutsche Tisco Investment Advisory, recent years have seen these expenses rise from 12% of operating costs to 16%.

Price Watch

Land prices have risen as well, making condominiums more expensive and squeezing the revenue of developers as they work to maintain prices attractive to the public. Good returns in the residential market have therefore become harder to achieve. “The trend of rising land prices has seen condominium prices continue to grow, despite stagnant demand,” Ben Taechaubol, CEO of Country Group Development, told OBG. “Whereas rental yields were 7-8% previously, such factors have slightly eroded the yield and, by extension, the attractiveness of investments.” Margins are also tight in the resale market. While some properties in prime locations retain their value and can even appreciate alongside new units, experience suggests that lived-in units can be difficult to resell at a profit.

According to the BOT, the average contribution of the condominium component of the House Price Index grew by 3.5% in 2017, hovering around 170.6. This reached 180.3 by May 2018, with Colliers expecting price increases in the city centre of 10-15% for the year and 5-8% in the outer areas of the capital. Slower growth has been witnessed in the price of detached houses and land, and for town houses with land. These categories had an average index level in 2017 of 130.3 and 140.5, respectively. “Although land and unit prices in Bangkok are inflating, they still remain lower than comparable offerings in other parts of South-east Asia. This has led to strong interest in upmarket properties among Chinese, Taiwanese, Singaporean and Hong Kong buyers,” Somchai Sirilertpanich, managing director of Syntec Construction, told OBG. “A good unit built on prime land with a desirable location will attract interest, and we expect 20-30% of luxury sales to be driven by foreign buyers.”

International Interest

International investors indeed play an important role in driving demand. For example, it is estimated that Chinese investors claim roughly 10% of mid-range residential volume. Foreign buyers can present hurdles to market analysis, though, as they tend to act more as owners than end-users, making it difficult to measure real demand. Marketing to this class of buyers can also require significant resources, such as time and money to host conferences and property tours. Still, catering to foreign investors – coupled with the plans of other sectors – has brought positive results. “With infrastructure investment and efforts to bring more Chinese tourists to leisure destinations in Thailand, investors have started to look at high-yield rental markets such as Koh Samui for residential and hospitality properties,” Kitisak Jampathipphong, president and regional owner of Century 21 Thailand, told OBG.

In late 2016 Beijing imposed restrictions on the movement of capital out of the country, affecting the level of real estate purchases their citizens make abroad. Some observers note that this has not dampened demand for property in Thailand, but has led to a drop in total real estate investment from China as the purchasing process has been made more difficult and investors rethink their strategy. However, certain segments could benefit from China’s efforts to keep more capital at home. Property prices in Thailand tend to be relatively low by international standards, appealing to those facing caps on overseas investments. The requirement to spend less money abroad is likely to support Chinese uptake of lower-end properties in particular.

Although international investors are a vital component of the market, there are notable limitations placed on foreign ownership of condominiums in Thailand. Under the 2008 Condominium Act, foreign ownership is limited to a combined 49% of the total floor area of all units in a condo building, meaning more than half of all units must be owned by Thai nationals. However, as the government looks to develop new areas for tourism, leisure, and high-tech industry and services in the provinces of Chonburi, Rayong and Chachoengsao as part of its Eastern Economic Corridor (EEC) mega-project (see Trade & Investment chapter), some stakeholders argue that foreign ownership restrictions on condominiums should be eased or lifted altogether. “Many agents have asked the government to allow foreigners to own up to 75% of the total floor space in condominium developments, but this proposal is still being reviewed. Doing so would be especially beneficial for the real estate market in the EEC, where most prospective buyers are non-Thais,” Kitisak told OBG.

Bangkok Office

The office market, meanwhile, is hitting its stride and operating in an environment not seen since before the 1997 Asian financial crisis. “You have to go back to the 1980s and 1990s to see such sustained occupancy levels,” Gulbrandson told OBG. “With strong occupancy, office rental rates are at or near all-time highs.” Still, the segment remains one of complex balance and planning, given the time it takes to bring new supply on-line, and the ever-changing interests of tenants and landlords.

The supply of office space in Bangkok remains tight, with the occupancy rate above 90% for grade-A and grade-B space in main areas such as the Central Business District, Phahonyothin Road and Ratchadapisek Road. Colliers placed total supply in the capital at 8.6m sq metres in the fourth quarter of 2017, with new space totalling 202,810 sq metres that year. In terms of uptake, businesses secured approximately 187,000 sq metres of new office space in 2016 and the same was occupied in 2017.

An estimated 634,795 sq metres was under construction at year-end and expected to hit the market through to 2021. Buildings in the works that will contain office space include 548 Ploenchit, a project being built across from the Central Embassy shopping mall and expected to be finished by 2022; One Bangkok, a mixed-use development on 17 ha in the centre of the city; The PARQ on Rama IV Road, with 60,000 sq metres of office space coming on-line in 2019 as part of phase one; and the Forestias, a 48-ha project on Bang Na-Trat Road.

Some highly sought-after space has recently been acquired in the capital and is to be developed into structures with office space. In 2016 the Minor Group and two partners signed a rare 50-year lease for a site on the corner of Silom Road and Convent Road for a mixed-use building. Construction will begin in 2018 and finish by 2024. In September 2017 Supalai acquired the 1.3-ha site of the Australian Embassy on Sathorn Road for BT4.6bn ($133.2m). It, too, will be developed into a mixed-use complex.

Tight capacity is leading to varied approaches by buy-to-let owners. In some cases, rents are being raised by landlords aware that tenants have few immediate options; any space still available in prime buildings is often small, oddly shaped or fragmented. Others are keeping the increases tempered for clients of large spaces in an effort to retain them when new capacity hits the market. Much of the inventory in Bangkok is dated and could be downgraded once more modern Grade-A buildings are constructed, and some companies may even migrate to smaller spaces in newer structures due to the area being maximised in a more efficient manner.

Despite a steady increase in rental rates over the years, Bangkok remains highly competitive with other regional business centres. According to Knight Frank, rents for commercial real estate in the capital are just 10% of those in Hong Kong and less than half the rents charged in Singapore.

Shop Around

Retail establishments are just as much part of the Bangkok fabric as high-rise residential and office buildings. Supply-side growth in the retail segment has been slow, however, in line with the sluggish consumer market (see Industry & Retail chapter). According to real estate company CBRE Group, in 2017 the total net leasable area of new supply in Bangkok was 100,000 sq metres – less than half the 230,000 sq metres of 2015 and just 20% of the 500,000 sq metres of net leasable area brought on-line in 2016. At the end of 2017 total retail supply in the capital stood at 7.36m sq metres, with an occupancy rate of 94.6%.

Century the Movie Plaza Sukhumvit was the largest new retail development in 2017, with 27,000 sq metres of net leasable space, while Megabangna Phase 2 brought another 10,000 sq metres to the market. As of the fourth quarter of 2017 about 500,000 sq metres of net leasable area was under construction in Bangkok, with an estimated 300,000 sq metres due for completion in 2018. This figure includes a 40,000-sq-metre IKEA store at CentralPlaza WestGate mall that opened in March, the second such store in Thailand. The ICONSIAM mixedused development, set on 8 ha of land along the Chao Phraya River, is set for completion at the end of 2018. Its mall will host the country’s first Apple store. Gateway Bangsue, in the north of Bangkok, is also scheduled to open towards the end of 2018.

In works slated for launch beyond 2018, the Bangkok Mall, developed by the Mall Group, will be situated across from the Bangkok International Trade and Exhibition Centre. The mixed-use project will house the largest mall not just in Thailand, but in all of South-east Asia, when complete in 2023. Retail space will be included in the Dusit Thani Hotel after renovation begins in 2019, while the Trust City World Exhibition and Trade Centre on Bang Na-Trat Road will also include shopping areas when opened in 2020.

Hotel Boom

Shopping centres cater both to the local population and to the many tourists that come to the country each year. To serve the latter, sufficient hotel offerings is vital. In 2017 the Park Hyatt Bangkok was completed, while a Hyatt Regency is set to open in Sukhumvit in November 2018. Other hotels launched in 2017 include a 587-room Ibis and the 180-room Mercure Bangkok Makkasan. The Waldorf Astoria Bangkok and the Ramada Plaza Chaofa Phuket came on-line in the first half of 2018, and the Kempinski Hotel Phuket and the Bangkok EDITION are anticipated before the end of the year. In early 2018 the Urban Hospitality Group announced its intention to open the mid-range Alt Hotel in the Silom district of Bangkok. The 150-room property will focus on attracting young tourists and business travellers, and is due near the end of 2019.

Performance & Partnership

Thailand’s major developers reported mixed financial results in 2017. Supalai’s revenues were up 10% and Ananda Development 6%, though SC Corporation reported a 13.7% drop as condominiums neared completion in 2017 but were not yet ready to be sold. Pruksa Holdings, meanwhile, reported a decline in revenues of 6.5% in 2017, while LPN Development experienced a 34.2% drop on the back of weaker demand.

Going forward, plans are for fairly aggressive expansion. Supalai says that it is launching 35 residential projects in 2018 worth a total of BT40bn ($1.2bn), while LPN Development is planning 14 projects and Property Perfect has 25 in the pipeline. Pruksa Holdings, too, will release 75 residential projects worth BT67bn ($1.9bn) in 2018 and SC Corporation will see 19 projects begin during the year. Piyasombat Property, for its part, is planning to invest at least BT12bn ($347.4m) in its portfolio through to 2022. This includes the redevelopment of the site of the Voravit Building on Surawong Road into a hotel. Chewathai is planning seven new projects in 2018, while the Crown Property Bureau is undertaking development of Bangkok’s Luang Suan area.

Foreign interests are active in the market as well, especially Japanese firms, which tend to form joint ventures with local players. Partnerships include Mitsui Fudosan and Ananda Development, with BT72bn ($2.1bn) of investment, and Mitsubishi Estate Group and AP, with projects valued at BT41bn ($1.2bn). In early 2018 Mitsubishi and AP introduced a new condo building called Life Sukhumvit 62. Sumitomo Forestry of Japan is another player in the local market, partnering with Thai companies Grande Asset Hotels and Property, and Property Perfect. The team will jointly develop the Hyde Heritage @ Thong Lor residential project, which will be completed in 2020 at the price of BT6bn ($173.7m). Furthermore, Pacific Star Development, a Singaporean firm, has partnered with DAMAC Properties of Dubai to develop properties in cities throughout South-east Asia, including Bangkok.


While it is likely that land prices will continue to rise, the supply-demand balance is set to remain stable as the cycle of new offerings followed by strong uptake continues – especially in office and residential. With outward sprawl around the capital and competitiveness in the central districts, opportunities will be driven primarily by location. Projects in desirable or practical areas with features that address buyer needs are expected to perform well.