Global Economic Slowdown Affecting Commercial Real Estate In Thailand
Regardless of the constant sub-prime crisis in the US real estate market, the straight impact on Thailand’s economy and real estate markets has been negligible. On the other hand, apprehensions are increasing as few economists consider that the slump in the US economy has not yet reached the base, and the degree of its impact is yet to be discovered.
These concerns are replicated by a more careful business approach implemented by both local and international companies in Thailand. Especially, large international companies have turn out to be extremely sensitive about possession costs. Despite the fact that the leasing activity in Bangkok in the first quarter of 2008 was upbeat, most of leasing transactions were intense in buildings offering monthly rentals less than THB 500 per sqm per month, at the same time as the average rental of Grade A space in the central business district (CBD) is more than THB 650 per sqm.
Government policies have not showed effect till this time
In view of the fact that the coalition government was formed, a number of economic incentive policies have been introduced. A few of these policies are straightforwardly encouraging to the property sector, like the abolition of the 30% reserve on foreign capital investments, approvals of mass transit projects and property stimulus measures concentrating on associated tax reduction on property sales transactions.
Though, effects from the majority of these policies have not yet been appreciated. There may be some time delays between the execution of the authentic policies and their effect on the economy and the property market. As a result, we suppose that the impact will ultimately be seen over the next quarters.
In addition to this, the government should thrive to reduce impacts from the fuel price crisis and deal with risks from the global economic recession; we can look forward to considerable improvement of the demand in the property market in the second half of 2008.
These concerns are replicated by a more careful business approach implemented by both local and international companies in Thailand. Especially, large international companies have turn out to be extremely sensitive about possession costs. Despite the fact that the leasing activity in Bangkok in the first quarter of 2008 was upbeat, most of leasing transactions were intense in buildings offering monthly rentals less than THB 500 per sqm per month, at the same time as the average rental of Grade A space in the central business district (CBD) is more than THB 650 per sqm.
Government policies have not showed effect till this time
In view of the fact that the coalition government was formed, a number of economic incentive policies have been introduced. A few of these policies are straightforwardly encouraging to the property sector, like the abolition of the 30% reserve on foreign capital investments, approvals of mass transit projects and property stimulus measures concentrating on associated tax reduction on property sales transactions.
Though, effects from the majority of these policies have not yet been appreciated. There may be some time delays between the execution of the authentic policies and their effect on the economy and the property market. As a result, we suppose that the impact will ultimately be seen over the next quarters.
In addition to this, the government should thrive to reduce impacts from the fuel price crisis and deal with risks from the global economic recession; we can look forward to considerable improvement of the demand in the property market in the second half of 2008.
Labels: fuel price crisis, property market, real estate market
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