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Bangkok Overall, Q4 2014

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Bangkok Overall, Q4 2014 MARKETVIEW Bangkok Overall, Q4 2014 Condominium Downtown Supply Hotel Downtown Supply Office Supply +5.1% y-o-y +3.3% y-o-y +2.6% y-o-y CONDOMINIUM Figure 1: Newly Completed Bangkok Condominiums No. of Units Midtown/Suburban Downtown Record-breaking prices of over THB 80,000 300,000 per sq.m. have been achieved 70,000 in five downtown condominium 60,000 projects in 2014. This reinforced our 50,000 belief that the downtown condominium 40,000 30,000 sector is a low-volume high-value 20,000 market with limited new supply. 10,000 0 F 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 2017F 2018F The number of condominium units 2015F launched increased by 281% Q-o-Q in Figure 2: Average Re-sales Prices of Downtown the downtown area and 13% Q-o-Q in Completed Freehold Units (High End and above) the midtown/suburban area. Due to political turmoil in the first half of the Sukhumvit Silom/Sathorn year, the total number of THB/sq.m Average Price (THB/sq.m.) Central Lumpini 200,000 189,667 condominiums launched throughout 180,000 177,114 2014 decreased by 37% in the 160,000 173,333 140,000 168,341 downtown market and 29% in the 120,000 midtown/suburban market, compared 100,000 80,000 to 2013. 60,000 40,000 20,000 0 The hot spot for midtown/suburban 2005 2006 2007 2008 2009 2010 2011 2012 2013 condominium launches in 2014 was 2004 Q1 2014 Q1 Q2 2014 Q2 2014 Q3 2014 Q4 along the MRT’s Purple Line. Throughout the year, 7,500 units were Source: CBRE Research, Q4 2014 launched in this area, accounting for Looking forward in 2015, we believe 58% of newly launched units along that the trend of forming joint ventures under-construction mass transit lines. to finance projects among Thai This has pushed developers to search developers, and between Thai for new locations along other under- developers and foreign investors, will construction mass transit lines where continue in the upcoming year. The there is less competition. Bangkok condominium market sentiment in 2015 will largely depend Still, the key issues in the on the pace of economic recovery, midtown/suburban market are how developers’ ability to transfer many speculative condominium buyers completed units and the presales of will default if they cannot resell before newly launched projects especially in completion and how many end-user the midtown/suburban market where buyers will be able to get mortgage buyers are most affected by the rising loans with tightened banks’ criteria. household debt. Q4 2014 CBRE Research © 2015 CB Richard Ellis (Thailand) Co., Ltd. | 1 MARKETVIEW BANGKOK OVERALL OFFICE Figure 3: Bangkok Office Market Total Supply Total Take-up Total Bangkok office supply increased sq.m. Vacancy Rate Vacancy Rate by 0.6% Q-o-Q due to the completion of 9,000,000 45.0% the Channel 5 Head Office Building, U- 8,000,000 40.0% 7,000,000 35.0% Place and the Hitachi Office Building 6,000,000 30.0% with a net lettable area of 20,000 sq.m., 5,000,000 25.0% 22,500 sq. m. and 7,000 sq.m., 4,000,000 20.0% 3,000,000 15.0% respectively. 2,000,000 10.0% 1,000,000 5.0% 0 0% The vacancy rate was 9.3%, dropping F 2008 2009 2000 2001 2002 2003 2004 2005 2006 2007 2010 2011 2012 2013 2014 2016F 2017F slightly by 0.2 percentage points Q-o-Q. 2015 The total net take-up for Q4 2014 was Source: CBRE Research, Q4 2014 38,923 sq.m., decreasing by 38.9% Y-o-Y. Total net take-up for the whole of 2014 was 180,000 sq. m., a 18.9% drop Y-o-Y. A reasonable level of demand and limited supply have caused office rents to rise by 4% - 10% Y-o-Y in all grades and areas. In Q4 2014, average Grade-A CBD rents increased by 0.6% Q-o-Q and 3.7% Y-o- Y to THB 850/sq.m./month. There is limited supply due for completion in 2015-2017. Less than 400,000 square meters of office space is Bhiraj Tower at EmQuartier, Sukhumvit under construction. About 30% of space under construction will be Grade-A in Due to be completed in Q1 2015 the CBD. We expect that rents will continue to rise because of high occupancy levels and limited new supply. FYI Centre, Rama IV Due to be completed in Q4 2016 Q4 2014 CBRE Research © 2015 CB Richard Ellis (Thailand) Co., Ltd. | 2 MARKETVIEW BANGKOK OVERALL RETAIL Figure 4: Bangkok retail Supply, take-up and Occupancy Rate In Q4 2014, the total Bangkok retail Net Area Total Supply Total Take-up Occupancy (sq.m.) supply was 6.7 million sq.m., Occupancy Rate Rate increasing by 6.3% Y-o-Y with six 7,000,000 100.0% 98.0% 6,000,000 additional new retail centres. The 96.0% biggest new development completed 5,000,000 94.0% 92.0% was the 50,000-sq.m. The Crystal 4,000,000 90.0% Ratchapruek, a community mall located 3,000,000 88.0% at Ratchapruek, a suburban location. 86.0% 2,000,000 84.0% 1,000,000 82.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 The overall occupancy rate stayed at 2000 Q2 1014 Q2 2014 Q3 2014 Q4 94%. The volume of occupied retail 2014 Q1 space increased to 6.3 million sq.m., up Source: CBRE Research, Q4 2014 by 4.2% Y-o-Y. In November 2014, the retail sale index increased by 1% Q-o-Q but decreased by 4% Y-o-Y. New retail construction continued to grow. Bangkok is one of the hotspots for development in Southeast Asia with more than 1.7 million sq.m. of new retail space due to be completed in the next few years. Most of the new supply will be in suburban locations which are The Crystal Ratchapruek mostly in emerging residential areas and along the extensions of mass transit systems. There will be more competition between newer malls and existing malls in suburban areas, such as the upcoming Bangkok Mall which will be up against Mega Bangna and CentralPlaza Bangna. Bangkok Mall, “Big Box “’grocery retailers have been Due for completion in 2017 suffering poor sales and both Tesco Lotus and Big C are considering reducing the amount of space they occupy themselves, by converting this excess space to rental space for third party tenants. This is a trend that is also being seen on other more mature markets such as the UK. Q4 2014 CBRE Research © 2015 CB Richard Ellis (Thailand) Co., Ltd. | 3 MARKETVIEW BANGKOK OVERALL APARTMENT Figure 5: Supply, Demand and Occupancy Rate In Q4 2014, the supply of apartments Supply Demand Occupancy Units (single ownership multi family Occupancy Rate Rate buildings) in the downtown area of 14,000 100% 12,000 Bangkok totalled just under 12,000 90% units, increasing by 0.2% Q-o-Q but 10,000 decreasing 1.2% Y-o-Y. Two new 8,000 80% apartments located in the Sukhumvit 6,000 70% area were completed with a total of 29 4,000 60% units. 2,000 0 50% 2009 2005 2006 2007 2008 2010 2011 2012 2013 The Central Lumpini area posted the 2004 Q2 2014 Q2 2014 Q3 2014 Q4 highest achieved average rents with 2014 Q1 Grade-A rents of THB 456/sq.m./month. Source: CBRE Research, Q4 2014 The occupancy rate in Q4 2014 was 95.6%, increasing by 0.6 percentage points Q-o-Q and 0.8 percentage points Y-o-Y. There was upward pressure on rentals because of strong demand for large units with increased expatriate numbers and a limited new supply of two- and three-bedroom apartment and condominium (multiownership) units HOTEL Figure 6: Future Supply in Downtown Bangkok In 2014, nine new hotels were No. of keys New Supply completed. Sukhumvit remained the Existing 50,000 most popular hotel location in Bangkok. The total supply of downtown 40,000 hotel keys is set to increase more than 30,000 12% by 2018 with the addition of around 5,500 keys. 20,000 10,000 Total tourist arrivals to Thailand 0 2008 2006 2007 2009 2010 2011 2012 2013 2014 decreased by only 6.7% Y-o-Y despite 2005 2018F 2015F 2016F 2017F the political problems, travel warnings and the enforcement of martial law. Source: CBRE Research, Q4 2014 Arrivals at Bangkok’s international airports fell more by 7.6% Y-o-Y, pushing down the average occupancy rate of hotels of all grades in Bangkok from around 74% in 2013 to 62% this year. Hotel room rates in Bangkok also dropped slightly by 2% Y-o-Y. Q4 2014 CBRE Research © 2015 CB Richard Ellis (Thailand) Co., Ltd. | 4 MARKETVIEW BANGKOK OVERALL HOUSING Figure 7: New Supply of Developer-Built Single-Detached Houses in the BMR In Q3 2014, 16,000 new low rise residences including single detached Units houses, semi detached houses, 30,000 townhouses and shophouses were 25,000 completed, increasing by 17.7% Q-o-Q but decreasing by 12.9% Y-o-Y. 20,000 15,000 10,000 With the political climate continuing to remain stable in Q4 2014, consumer 5,000 0 and developer confidence is returning. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 However, banks have become stricter 2003 Q1 2014 Q1 2014 Q3 about loan to income ratios as 2014 Q2 household debt remains high.
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