The hospitality and condominium markets in Bangkok have been directly impacted by the ensuing political turmoil, although some prime real estate segments remain largely unaffected, according to CBRE Research Thailand.
In its Q1 2014 Bangkok Residential Report, CBRE stated that the political crisis has affected the capital’s condo market, which is experiencing a downturn in sales, resales and new launches especially in the midtown and suburban areas where developers are building similar one-bedroom units.
Prices in some downtown areas, such as the Met or Sathorn, however, continue to rise steadily because of low stock and high demand for high-end properties.
“We are not significantly worried about the effect of the slowdown on the downtown market because of the limited amount of new supply under construction and the large reduction in built but unsold inventory,” according to CBRE.
The report also noted that expatriates have been increasingly selective of condo units to rent in the Sukhumvit, Sathorn and Central Lumpini areas because of the lack of desirable amenities, whilst many ageing condo buildings have not been renovated in recent years.
International tourist arrival (ITA) in the capital also dropped by 11.1 percent, year-on-year in the first quarter, to 5.32 million visitors, affecting occupancy rates. Many hotels near protest areas reported vacancy rates of more than 50 percent as several events, conferences, exhibitions and bookings in the last quarter were cancelled due to safety concerns.
“We have seen a slowdown in new hotels opening and new hotel construction starts,” CBRE said, but “growth will be heavily dependent on the Chinese feeder market,” which posted a 100.1 percent year-on-year increase in Q1 2013 but suffered a 13.8 percent year-on-year drop in Q1 2014, per Bangkok Luxury Hotel MarketView Q1 2014. Chinese nationals had a 14.7 percent share of the total ITA in the Kingdom last quarter.
Meanwhile, as foreign tourists shy away from Bangkok, tourism in the resort destination of Phuket remained resilient, with a reported 6.9 percent increase, year-on-year, in foreign arrivals, resulting in higher occupancy rates for local hotels.
Overall, CBRE noted in its Thailand Investment MarketView Q1 2014 that investor sentiment in Bangkok’s prime areas has been generally unfazed by the country’s political uncertainties, citing the recently reported land acquisitions by several property developers, including the 1.4 acre plot near the BTS Nana area purchased by Quality Houses for an estimated THB2.5 billion (USD78 million), and the conversion to freehold right of the high-profile MahaNakhon project from PACE Development.
“This confirmed our belief that the short-term political crisis is unlikely to impact Bangkok CBD land prices adversely,” the report concluded.
Source: www.property-report.com
