Are Thai property buyers finally ditching the ‘wait and see’ approach?
They are beginning to establish acquisition strategies for this year.
The year has started with a significantly higher level of activity. According to Colliers, while the mantra for last year was “wait and see,” 2021 has seen buyers establish acquisition strategies and prepare for implementation, while some sellers have shown readiness to reduce pricing to attract investors.
While luxury hotels Sindhorn Kempinksi, Four Seasons and Capella have opened in Bangkok in the last few months, Thailand’s large hotel sector remains under enormous strain. Colliers notes that for the luxury segment, occupancy rates are hovering under 30%, while lower down the scale many hotels remain shut, particularly in resort destinations Phuket and Koh Samui. Owners have continued to benefit from government-led stimulus measures and loan repayment holidays, easing immediate cash flow stress and helped limit ‘fire sales’ of hotel assets.
Here’s more from Colliers:
It has also been a challenging start to the year for the office segment, with occupiers reassessing their needs for space and rationalising their usage, creating a net drop in demand. The residential sector has seen healthy levels of domestic demand, especially around transit routes and for landed housing, and the industrial sector has also shown strong resilience.
In the hotel sector domestic demand cannot compensate to a significant extent in an industry that is hugely reliant on international visitors. The road to recovery is expected to take three to four years to get back to pre-COVID-19 levels, and we are seeing owners reconsider their positions, which we expect to be reflected by moderate increases to cap rates.
This is in contrast to Thailand’s well-established logistics, warehousing and industrial sectors, especially around Bangkok and within the Eastern Economic Corridor. Demand has not dropped far below normal levels and some specialist sectors, such as data centres, have seen activity increase. Once international travel becomes more practical, we expect activity to generally rise. Cap rates should remain stable for the time being with an outlook for potential declines later in the year.