Posts Tagged ‘Bangkok real estate market’

Cost multiplying for industrial market due to floods

November 20, 2011

The ongoing floods that have affected more than 59 provinces in Thailand have devastated huge swathes of agricultural land but the extremity of the floods have put more damaged industrial activity, including industrial estates and further potential flooding threatens more central locations causing greater disruptions to the supply chain, according to Colliers International Thailand.
While the floods have ravaged many parts of Thailand since August, relatively little damage to manufacturing was inflicted due to most factories being located away from initial flooding areas. However this changed on October 5th when water levels reached their highest point in living memory and Ayutthaya, home to significant manufacturing, was seriously affected. According to Narumon Rodsiravoraphat, Senior Manager for Industrial Services at Colliers, far greater damage was caused to industry in the last few days compared to the previous few months. “Over a hundred times greater financial loss to industry was incurred since 5th October due to severe damage to two industrial estates and two others have been evacuated in anticipation of flood waters reaching them”, said Narumon.

Many warehouses and distribution centres have been seriously affected especially in Ayutthaya area and along the main highway of Phahonyothin road which has become effectively the channel for water in the north to flow down to the central provinces. Over the course of the week further flooding is expected due to looming storms and industrial facilities in Pathumthani and Bangkok itself are now in danger.

According to Narumon, more than 500 factories have been forced to close during this situation and more than 100,000 workers have been affected from this crisis. “The damage from the flooding may be take up to two to three months to be accessed and rectified after the water level decreases as companies must take time for renovation of facilities as well as repair and re-operation of machinery”, she added.
The industrial market has picked up rapidly from 2010 and there has already been a shortage of warehouse space in some locations, especially good quality large space in Ayutthaya and some Bangna areas. Lamchabang, where there is strong demand for free zones, also seems short of supply. “Developers should understand more of the market demands and requirements in terms of specification, locations, layout, and general/free trade zones, etc. And we do hope that all new warehouse developments will all be raised floor”, said Narumon.
Although the initial reaction after the flood will be for the relocation of manufacturing, in reality manufacturers will remain rather sanguine according to Patima Jeerapaet, Managing Director of Colliers. “Many have invested significant amounts of money over time and they are just not going to walk away”, he said. “It also takes time to create a supplier network as well” he added. Patima also noted that serious damage was not limited to Thailand and the horrors of the flood are also evident in Cambodia, Philippines and Laos. “Manufacturers will be wary of relocating to countries with less reliable infrastructure to cope with floods and they may decide that Thailand is a better location than say Vietnam or Cambodia due to this fact. However new investment for manufacturing locations may be shifted towards non flooding areas in Thailand. All factories, distribution centers, and logistics companies also must create and work out their contingency plan well enough in advance”, said Patima.

One possible ramification could be the development of back up storage centres in locations upon higher ground that can protect goods from damage. “After the riots in 2010 many office occupiers considered back up locations and the same may now apply for industrial activity”, said Patima. However, unfortunately the flooding story has not run its course and a better assessment can be made in a week or so time. “We only hope that further damage is kept to a minimum”‘ added Patima.

Residential market likely to remain uncertain for sometime after the floods

November 20, 2011

With the ever growing inundation of Bangkok and exhausting uncertainties regarding the potential flooding situation in the centre of the city; even in the best case scenario the pattern for the residential market will be difficult to assess even after the floods have receded, according to real estate company Colliers International Thailand. For the rest of the quarter residential launches are very likely to remain subdued due to current sentiment and logistics. However unlike the post May 17 2010 situation, when buyers jumped straight into the market, many will probably be cautious about making such a big decision as a property purchase until the ongoing events have ended and an analysis of the flood is undertaken, according to Patima Jeerapaet, Managing Director of Colliers. “The full story will need to be known before buyers come rushing in again and developers will also need to reevaluate projects”, he said.

 

The decision as to whether to purchase landed property versus a high-rise condominium will likely be in favour of the latter due to the floods but even then people will evaluate which areas are less prone to floods. “Even if your high-rise home is protected you still don’t want the area inundated with flood water for weeks”, pointed out Mr Jeerapaet.  However long the delays in buyers coming back in the market the pent up demand is likely to increase and eventually a significant number of launches will take place. According to Tony Picon, Associate Director at Colliers, condominiums will be even more popular than they were before the floods. “We are noticing that more older people and children are staying in condominiums at the moment and the reason is that the owners are using units as temporary accommodation for their extended families”, he said. In the aftermath of the floods many who were forced to evacuate to centres may rethink their options. “You could find families encouraging one of their number to purchase a condominium unit and even help in financing, as it would then function as a back-up residence”, pointed out Mr Picon.

 

At the high-income end of the market the same reasoning could add to the trend for purchasing second homes in resorts such as Hua Hin or Pattaya. “Many have fled to these resorts especially people who don’t need to work in Bangkok such as children and the elderly”, stated Monchai Orawongpaisan, Senior Manager for Residential Project Sales and Marketing.  Again family pressure could result in more property being purchased not only as a weekend retreat but also as a back- up residence. “We could see significant activity in the market during the first half of next year based on this trend in Hua Hin, Pattaya and other nearby resorts”, he added.

 

While high rises will prove more popular, landed property will still remain a strong presence in the city. There are dire warnings of global warning leading to more regular flooding problems, including flash floods as a result of heavy downpours and a future trend could be simply opting for houses on stilts which reflected a common mode of living in the past. “Many countries have been affected by floods and stilt based housing is proving more popular with innovative designs coming to the fore which exclude the use of hardwood pilling”, said Mr Picon. The existence of such properties would also support the city in allowing water to run off quickly. “It is basically a way of accepting Mother Nature and living with it rather than trying to confront the situation “, he added.

 

Mr Picon pointed out that the problem for buyers finding locations that will be relatively safe from future floods is that effects can vary based on a number of factors. “Firstly, flooding is a combination of run-off from the north, heavy rains and high tides in November; and the impact of each differs for every flood leading to different geographical patterns of inundation “, said Mr Picon. The other variable is that the elaborate flood protection system for Bangkok is managed by politicians and administrators, and their priorities can change. “If the whole of Bangkok is inundated this time then buyers will face a big dilemma as to finding suitable locations in the future”, warned Mr Picon.

Bangkok remains the biggest supply of office space in ASEAN

March 21, 2011

Bangkok contains most office space compared to other ASEAN commercial cities including Singapore according to research by Colliers International throughout Asia Pacific. Tokyo contains by far the greatest amount of space in Asia as a whole with around ten times the amount as Bangkok. Patima Jeerapaet, Managing Director of Colliers in Thailand asserted that Bangkok’s strong position is a springboard for Bangkok to benefit from the ASEAN Economic Community (AEC) in 2015. “The service sector will be a key factor in the changes that will occur in 2015 and the fact that there is a significant amount of office space already and potential for more is a huge advantage for the city” he said.

Research by Colliers shows that Bangkok has around 7,900,000 square metres compared to Singapore’s just over seven million. The other cities of Manila, Jakarta and Kuala Lumpur are further behind but not by much, according to Antony Picon, Associate Director for Research at Colliers. Most of the supply in Bangkok occurred in the 1990’s. “Other cities are catching up but opening up the service sector in Thailand should lead to the next wave of office development” he pointed out. Mr Picon also explained that commercial activity in Thailand was centralized in Bangkok while in other countries it was more dispersed. “In Philippines there is a large office market in Cebu, Indonesia has Surabaya, Malaysia has Penang and Vietnam has an additional office market in Hanoi and Danang; in Thailand it is limited to Bangkok”.

One of the key components of the AEC is the allowance for 70% ASEAN foreign equity participation in all domestic service industries by 2015. “It takes time for companies to really pay attention to the changes and make plans for benefiting from this, stated Mr Picon. “Thailand has many service sectors that can compete in the region such as architecture and IT but companies must hone the skills of their employees to become true regional champions”, he said. “Language skills will be a key factor in all types of business in the future and this is one area that Thailand must move forward on”, he stressed. The danger for Thailand, according to Mr Picon, is the wish to have greater protection from non-ASEAN companies using the AEC to further penetrate the market.”The more protectionist clothing you wrap yourself in, the weaker you become” he warned. “Manchester United wouldn’t be where they are today if they didn’t play the likes of Chelsea and Liverpool”, he contended.

Mr Patima recognizes the great potential for Bangkok to be a key service sector provider in the coming decades. “There is still plentiful land available for office development especially close to the mass transit lines and rentals will remain very competitive within ASEAN”, he said. Mr Patima believes that concerted action by both private and public sectors should take place as soon as possible to ensure that 2015 will be a positive for the country. “If this happens then we will see a renaissance of the office market in the second half of the decade and Bangkok will continue to lead the way”, he added.

EARTH HOUR 2011 : One hand for our WORLD

March 18, 2011

Patima Jeerapaet, Managing Director of Colliers International Thailand

Patima Jeerapaet, Managing Director of Colliers International Thailand

Colliers International Thailand would like to invite everyone to be a part of EARTH HOUR 2011 campaign to help the EARTH.

Earth Hour 2011, the annual ‘Lights Out’ event, will take place on Saturday 26 March 2011 at 8:30pm. By turn off the lights for 1+ hour. “We are creating a campaign to public and our clients to be aware and to understand Earth Hour initiatives. We would like to raise awareness about better environment and sustainability living on the public’s perspective. We want everyone to get involved and have the sense of belonging of their own contribution to the earth.” said Patima Jeerapaet, Managing Director of Colliers International Thailand.

“We start this campaign since 1st of March 2011 with 3 properties under our management, Deutsche Bank, Assumption University (Suvarnabhumi Campus) for AU Mall, Dormitory, Sport Complex, Car Parking and The Tepp Serviced Apartment and we are promoting this campaign with our clients during this period” he added.

Colliers International Selected By International Association of Outsourcing Professionals (IAOP) as Top Outsourcing Provider

March 18, 2011

— Leading Real Estate Services Firm Makes Elite List for Sixth Consecutive Year —

Reinforcing its position as a best-in-class commercial real estate organisation, Colliers International has been selected as one of the world’s top 100 outsourcing providers for the sixth consecutive year as part of the 2011 Global Outsourcing 100®. The list recognises the best outsourcing firms across multiple industries, as selected by an independent judging panel organised by the International Association of Outsourcing Professionals (IAOP).

The Global Outsourcing 100 is a critical resource for all companies seeking to do business with best-in-class service providers and vendors. In this way, The Global Outsourcing 100 is more than just a ranking – – it is a critically important referral tool for any company seeking to find top-quality business partners.

“It comes as no surprise to us that Colliers International has once again been recognised as a leading firm by the 2011 Global Outsourcing 100,” said Douglas P. Frye, Global President and CEO of Colliers International.  “Our enterprising service philosophy and approach truly differentiates our professionals from other service providers. In addition, our shared culture and commitment to excellence has enabled Colliers International to accelerate the success of clients throughout the world.”

“To make this prestigious list for the sixth consecutive year is a great achievement for us and a true reflection of our company’s essence. At Colliers, our people are our asset,” said Piers Brunner, CEO of Colliers International Asia. “In Asia, we have carved a name for ourselves in service excellence and we will continue to advance further this year to become the undisputed top real estate organisation in the region. We look forward to collectively accelerating our success.”

Serviced apartments weather hard times but future supply poses more problems

November 22, 2010

The serviced apartment market bounced back after a torrid Q2 with occupancy up as expats flocked back to the city, according to Colliers International Thailand research report for Bangkok serviced apartments in Q3 2010. While occupancy increased to around 60% in Q3 this still remains below the 70% recorded in the 3rd quarter of 2009. However Antony Picon, Senior Manager for Research at Colliers was upbeat regarding the numbers. “Considering what the sector has gone through the figures are robust. The Japanese are the key market for the longer stay segment of the market and most who left during the troubles appear to have returned”, he said.

But even if the market continues to pick up, the short term future could be bleak according to Patima Jeerapaet, Managing Director at Colliers. He pointed out that in three years from 2009 to the end of 2011 supply could have increased by 40% which would be difficult for even a strong market to absorb. “The long term stay market, while keeping this sector stable compared to hotels, also means that you are highly unlikely to have an upsurge in expats coming to work here in a small space of time”, Mr.Patima said.

The new growth area for apartments is along Thong Lor road in late Sukhumvit.  Considering the distance from the CBD, rental rates in late Sukhumvit are the second highest in Bangkok, even greater than the upmarket Central Lumpini. Jean Marc Garret, Director of Advisory Services | Hospitality explained that a higher proportion of Grade A newer branded residences located in Thong Lor drive up overall rental rates. “Also the area has more of a community feel and is very popular with Japanese expats” Mr. Garret remarked. “The area also benefitted somewhat from the troubles in May as many expats felt it was far away from the riots witnessed on international TV stations”.

Serviced apartments are sandwiched between two types of business, according to Mr Picon; competing for short term business with hotels and long term stays with apartments for lease or condominiums. “They can do this successfully but many will have to distinguish themselves more in the future”, he added.  “ With their larger unit configurations some could develop a niche in the medical tourist market, especially for families coming from the Middle East or even create flexible home offices and meeting rooms for visitors who wish to conduct business”, he added.

New launches in Q1 2010 continue the breakneck pace set in the last quarter of 2009

May 20, 2010

The condominium market continues to be the star performer in the Bangkok real estate market with new launches and supply continuing to register record growth. This was the main conclusion of the latest Bangkok Condominium Market Report from Colliers International Thailand for the first quarter of 2010. 

“We have witnessed another bumper quarter for the condominium market in Bangkok, a welcome state of affairs amid the continuing uncertainty clouding other property sectors” stated Dr. Patima Jeerapaet, Managing Director of Colliers International Thailand. 

“Nearly 13,700 units were launched in Q1 2010, a handful less than the previous quarter” observed Dr. Patima. 

It was not only launches that made the news this quarter. “This year is likely to see the largest completion of new supply since 1997 with an estimated increase of just over 30,230 units compared with approximately 27,430 units in 2009” pointed out Mr. Surachet Kongcheep, Manager of Research & Advisory for Colliers International.  About 6,940 units were supplied in Q1 2010. 

Dr. Patima believes that the tax incentives remain an impetus to temporarily boosting existing supply and the future expiration of incentives at the end of May are likely to cool the market, allowing for some consolidation. 

Whilst other sectors have been affected by the recent unrest in the capital, the condominium market remains immune. “Some launches have been slightly  affected  by the physical constraints caused by the recent demonstrations but not by any discernable lack of sentiment” Dr. Patima stressed. “End-user buyers maintain a strong interest in purchasing their first property” he added. 

The key to the success in the condominium market recently is in large part due to the efforts from the developers themselves in tapping into pent up demand. According to the Real Estate Information Center (REIC) 88% of purchasers of new condominium units are first-time buyers. Most of these buyers are attracted to the low to mid end projects offering smaller sized units. “We are witnessing a rapid take up of units in the million and a half Baht range that appeal to first time buyers wishing to place their first steps on the property ladder” pointed out Antony Picon, Senior Manager for Research & Advisory at Colliers International. These are mostly one-bedroom units ranging from 26 sq m to 40 sq m. “The design of these units is interesting as the smaller units tend to have sliding doors in order to utilize space and can really function as studios as well” Mr. Picon added.

Affordability is likely to be the key demand driver going forward spurred on by the ongoing growth in mass transit railways.  While the majority of newly launched developments were in the low to mid end category, the PYNE by Sansiri was sold out in one day and showed the resilience of the high end market as well. Most of the large scale developments were launched by listed developers such as LPN Development, Pruksa Real Estate and Asia Properties. “The experience and financial underpinning of the listed companies is critical to large scale projects” stated Mr. Picon 

However, smaller non-listed developers launched a wide variety of projects in Q1 2010. In fact the majority were from these but the overall number of units was less than from the listed ones. Mr. Surachet stated that the average number of units from listed developers launched in Q1 2010 was 707, while the average from non-listed ones was 280. Mr. Picon said “ Those smaller developers are starting to dip their toes in the water although a lot more tentatively than in the past”. 

Mr. Picon believes that the successful model for the condominium market that has been established here can be partially replicated in other countries. He tells of a friend of his who visited from Vietnam and viewed some show units in Bangkok recently. “He was exasperated that such condominiums, using high quality materials and designs as well as far superior facilities and affordable unit sizes, did not exist in Ho Chi Minh City”.”It could be time to export some of that success” he concluded.  

For further information, please contact:
Colliers International Thailand
Dr.Patima Jeerapaet
Managing Director
Tel : 662 656 7000
E-mail : patima.jeerapaet@colliers.com  

Mr.Antony Picon
Senior Manager | Research & Advisory
Tel : 662 656 7000
E-mail : antony.picon@colliers.com 

Mr.Surachet Kongcheep
Manager | Research & Advisory
Tel : 662 656 7000
E-mail : surachet.kongcheep@colliers.com