Thailand Real Estate Boosted by GDP Growth

Industry professionals predict that Thailand’s residential property market could see up to 10% growth on the back of the country’s improving economic fundamentals....

Industry professionals predict that Thailand's residential property market could see up to 10% growth on the back of the country's improving economic fundamentals.

Thailand remains one of Asia Pacific's most popular investment destinations, particularly with buyers from China. Rather than focusing on properties in popular beach resort locations, investors are shifting their focus to the suburbs of Bangkok and other major cities with developed infrastructure and strong domestic demand.

"We believe that the property market in 2015 will be better than last year by up to 10%," said Thongma Vijitpongpun, chief executive of Pruska Real Estate.

Residential property prices set to increase in 2015

In line with increased transaction volume, it is anticipated that property prices in Thailand could inflate by as much as 5% during 2015, possibly more if demand continues at the current rate.

A slowly improving economy, registering modest growth in 2014 has enhanced investor sentiment considerably and is set to gather momentum over the next five years. Growth in the property market has been attributed to the Thai government's investment in infrastructure projects, creating demand for residential property in the suburbs of Bangkok where there is easy access to existing or new mass-transit routes.

Pornnarit Chonchaisith, president of the Thai Real Estate Association said: "The Asean Economic Community's coming into effect in 2015 will also fuel demand for homes both in Bangkok and in provinces near our neighbouring countries from both local and foreign buyers who use Thailand as their springboard for the AEC."

Investors shifting focus to domestic rental market

Developed infrastructure is critical for property investors in residential markets and Thailand's government is committed to further expanding its investment programme to drive the economy forward at a faster pace than experienced in 2014.

As a rule of thumb, GDP growth of 1% translates into property market growth of around 1.5% and following a relatively flat year, 2015 should see a considerable improvement that will impact property prices significantly.

Analysts forecast that residential prices will increase by up to 5%, land (depending on location) by as much as 10%, while the cost of construction materials will rise by around 5% in 2015.

Demand will continue to outstrip supply in 2015

Thailand has been a popular investment destination for British buyers for a number of years although whilst the preference has largely been for holiday properties in beach resorts, sentiment is shifting towards the bustling suburbs of Bangkok where there is a thriving domestic rental market.

Buyers principally from China have shown a growing interest in condominium investments in suburbs located close to commuter transport links which appeal to young professional renters working in the city.

As availability of development land along Thailand's coastline decreases, investor attention will shift focus to the domestic residential market, where demand continues to outstrip supply. With improving fundamentals, Thailand's property market will continue on its growth trajectory, presenting considerable opportunities to maximise capital growth and rental yield through strategic real estate investment.

- Tuesday 06 January 2015

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